Cameron Green, Ikoyi - UPDC · 2018. 9. 14. · by the provisions of section 359 of the Companies &...

Cameron Green, Ikoyi

The consolidated financial statements are in line with the International Financial Reporting Standards (IFRS) and Companies and Allied Matters Act (CAMA) and have been independently audited by PricewaterhouseCoopers (PwC).

The financial statements have been prepared in such a manner as to provide stakeholders with an understanding of the company’s business, performance, prospects and strategy. This report is also intended to provide stakeholders with an appreciation of the overall environment in which the company operates.

The report covers the operation of UACN Property Development Company (UPDC) Plc. and its subsidiaries for the financial year ended 31st December 2014.

SHAREHOLDERS’ INFORMATIONSubstantial shareholders and analysis of shareholding Shareholder E-service Application, E-dividend and Data FormsProxy FormAdmission Form

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NOTICE OF ANNUAL GENERAL MEETING

UPDC AT A GLANCEVision and missionPerformance highlightsUpdc profile

COMPANY REVIEWBoard of directorsChairman’s letter to stakeholders

SUSTAINABILITY AND GOVERNANCEDirectors’ reportCorporate governance report

ANNUAL FINANCIAL STATEMENTSResponsibility for annual financial statementsReport of the audit committeeReport of the independent auditorStatements of comprehensive incomeStatements of financial positionStatements of changes in equityStatements of cash flowsNotes to the financial statementsValue added statementFive-year financial summary

UPDC ANNUAL REPORT 3

NOTICE IS HEREBY GIVEN THAT the 17th Annual General Meeting of the Members of UACN Property Development Company Plc will be held at Arthur Mbanefo Hall, Golden Tulip Festac Lagos, Amuwo-Odofin, Lagos State on Tuesday 1st September 2015 at 10:00 o’clock in the forenoon in order to transact the following businesses:

Ordinary Business

1. To lay before the Members the Report of the Directors, the Consolidated Statement of Financial Position of the Company as at 31st December 2014, together with the Consolidated Statement of Comprehensive Income for the year ended 31st December 2014 and the Reports of the Auditors and the Audit Committee thereon.

The reason for ordinary resolution number 1 is to comply with the provisions of section 345 of the Companies and Allied Matters Act Cap C20 Laws of Federation which requires the Directors once at least in every year to lay before the Company in general meeting copies of the financial statements of the Company.

2. Declare a Dividend The reason for ordinary resolution number 2 is for

shareholders to consider and approve the dividend recommended by the Board of Directors out of the distributable profits of the Company for the financial year ended 31st December, 2014.

3. Re-elect Directors The reason for ordinary resolution number 3 is

that article 78(1) of the Articles of Association of the Company provides that except for a Director appointed to the office of Managing Director or any other executive office, at the Annual General Meeting in every year one-third of the Directors for the time being, or, if their number is not three or a multiple of three, then the nearest one-third shall retire from office.

The Board of Directors is currently made up of 5 Non-Executive Directors and 2 Executive Directors.

Mr. Adekunle O Awojobi and Mr. Abdul A Bello are

the Directors retiring by rotation at the meeting and being eligible offer themselves for re-election. As required by the Code of Corporate Governance in Nigeria 2011, the profiles of the two Directors are on pages 15 and 16 of the Annual Report. The outcome of the recent Board Evaluation exercise shows that the Board was satisfied with their performance as Directors of the Company during the 2014 financial year.

4. Appoint a new External Auditor NOTICE IS HEREBY GIVEN THAT the proposed

External Auditor is Ernst & Young. The reason for ordinary resolution number 4 is that

the Code of Corporate Governance in Nigeria 2011 provides that External Audit firms should be retained for no longer than ten (10) years continuously. Having been the External Auditor of the Company for more than ten years, PricewaterhouseCoopers will retire at the Meeting. The proposed External Auditor being recommended for shareholders’ approval by the Board emerged from a rigorous selection process at Management, Audit Committee and Board levels.

5. Authorize the Directors to fix the remuneration of the Auditors

The reason for ordinary resolution number 5 is for the shareholders to empower the Directors to fix the remuneration and expenses of the External Auditors for the financial year ending 2015.

6. Elect Members of the Audit Committee The reason for ordinary resolution number 6 is that

by the provisions of section 359 of the Companies & Allied Matters Act Cap C20 Laws of the Federation, a Company shall at every Annual General Meeting elect an Audit Committee consisting of an equal number of Directors and representatives of the shareholders of the Company (subject to a maximum number of six members).

The names and profiles of candidates nominated for election to fill the three shareholders’ slots on the Audit Committee will be posted on the Company website before the meeting. The Board of Directors has

Notice of annual general meeting


nominated Mr Abdul Bello, Professor Okon Ansa and Mrs Halima Alao to represent it on the committee.

Special Business7. Fix the remuneration of the Directors. The reason for special resolution number 7 is to

approve the remuneration payable by the Company to its Non-Executive Directors for their services as Directors of the Company for the financial year ending 2015.

8. Increase of Authorized Share Capital(i) “That the amount forming the authorized share capital

of the company be and is hereby increased to N1.75 billion by the creation of 1,500,000,000 additional ordinary shares of 50 kobo each which shall rank pari-passu in all respects and form the same class with the existing shares in the company”

ii) “That the subscriptions clauses of the Memorandum of Association and the Articles of Association of the Company (as amended) be further amended to reflect the new authorized share capital.

The reason for special resolutions number 8(i) and (ii) is to increase the authorized share capital of the Company to accommodate any future capital raise, rights issue, and scrip issue actions.

9. Capital Raising To consider and if thought fit, to pass the following,

with or without modification, as a special resolution of the Company:

i. “That the Directors be and are hereby authorized to raise, whether by way of a public offering, rights issue or any other method(s) they deem fit, additional capital of up to N30,000,000,000 (Thirty Billion Naira) through the issuance of shares, convertible or non-convertible securities, loan notes, bonds and or any other instrument(s), whether as a standalone transaction or by way of a programme, in such tranches, series or proportions, at such coupon or interest rates, within such maturity periods, at such dates and time and on such terms and conditions, including through a book building process or other process(es) all of which shall

be as determined by the Directors, subject to obtaining the approvals of relevant regulatory authorities.”

ii. “That any issued shares not taken up by the existing shareholders within the stipulated period be determined by the directors and offered for sale to interested shareholders of the company”.

iii. “That the Directors be and are hereby authorized to accept payment for rights by shareholders in excess of the size of the rights offer and thereby to accordingly increase the size of the rights offer by the amount of excess shares paid for”

iv. “That the Directors be and are hereby authorized to do all such other things, including but not limited to the appointment of professional advisers, execution of all transaction documents, processing of all regulatory approvals to the issue to give effect to this resolution ”.

The reason for special resolution number 9 is to raise additional capital to fund the Company’s growth plans and restructure its finances.

ProxyA member of the Company entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and vote instead of the shareholder and such a proxy need not be a member of the Company. A proxy form is enclosed and if it is to be valid for the purposes of this meeting, it must be completed and deposited at the Registered Office of the Company not less than 48 hours before the time for holding the meeting.Dated this 28th day of April, 2015By Order of the Board

Godwin A Samuel, Esq.,Company SecretaryFRC/2013/NBA/00000002608

Registered OfficeUAC House1-5 Odunlami StreetLagos


Notes

Dividend In view of the results, the Directors have recommended the payment of a dividend of 50 kobo per ordinary share to members. The resolution to this effect will be put to the meeting for approval by members. Dividend Warrants If payment of the dividend is approved, the warrants will be posted on Wednesday 2nd September 2015, to shareholders whose names are on the Register of Members at the close of business on Friday 7th August 2015.

Closure of Register and Transfer BooksThe Register of Members and Transfer Books will be closed on Monday 10th August to Friday 14th August 2015 (both dates inclusive) for the purposes of dividend payment. .

Audit CommitteeThe Audit Committee consisted of three (3) Shareholders and three (3) Directors during the year in review. Any member may nominate a shareholder as a member of the Committee by giving notice in writing of such nomination to the Company Secretary at least twenty-one (21) days before the Annual General Meeting. Nominators should please submit a brief profile of their nominees to the Company Secretary along with the nomination forms for publication in the annual report for the information of all shareholders.

Unclaimed Share Certificates and Dividend WarrantsShareholders are hereby informed that a sizeable quantity of share certificates and dividend warrants have been returned to the Registrars as unclaimed. Some dividend warrants have neither been presented to the Bank for payment nor to the Registrar for revalidation. The list of Unclaimed dividends has been uploaded on the Company’s website. Affected members are by this notice please advised to contact the Registrars, (Africa Prudential Registrars Plc) or call at their Office at 220B, Ikorodu Road, Palmgrove, Lagos during normal business hours or call them on 01-4606460. Annual Report & Unclaimed Dividend ListShareholders who wish to receive electronic copies of the Annual Report & Accounts and Unclaimed Dividends list should please send their names and e-mail addresses to the Registrars at [email protected].

E-Dividend/BonusPursuant to the directive of the Securities and Exchange Commission notice is hereby given to all shareholders to open bank accounts, stock-broking accounts and CSCS accounts for the purpose of e-dividend/bonus. A form is attached to this annual report for completion by shareholders to furnish the particulars of these accounts to the Registrar (Africa Prudential Registrars Plc) as soon as possible.


Board of Directors, Professional Advisers etc

Board of Directors

Mr. Larry E. Ettah Non-Executive ChairmanMr. Hakeem O. Ogunniran Managing Director/CEOMrs. Folasade O. Ogunde Finance DirectorMrs. Halima T. Alao Non-Executive DirectorProf Okon A Ansa Non-Executive DirectorMr. Adekunle Awojobi (alternate: Mr Babajide Fetuga) Non-Executive DirectorMr. Abdul A. Bello Non-Executive Director

Record of Director’s attendance at Board MeetingsIn accordance with section 258 (2) of the Companies and Allied Matters Act, Cap C20 LFN 2004, the record of Directors’ attendance at Board Meetings during the year is available for inspection at this Annual General Meeting.

Company SecretaryGodwin Abimbola Samuel, Esq.

RegistrarsAfrica Prudential Registrars Plc220B, Ikorodu RoadPalmgrove, Lagos

Registered Office and Transfer OfficeUAC House1-5 Odunlami StreetLagos

External AuditorPricewaterhouseCoopersChartered Accountants252E Muri Okunola StreetVictoria IslandLagos

A motion will be moved at the meeting to appoint a new external auditor to replace PricewaterhouseCoopers who have reached the regulatory tenure limit.


Alone we can do so little;together we can do so much.

Helen Keller

OUR VISIONTo be the No. 1 real estate company

in our chosen markets, offering exceptional products and services to

customers

OUR MISSIONTo grow our top-line at twice the rate of

Nigeria’s GDP growth and achieve an average EBIT of 24%


Performance highlights2014

N’0002013

N’000

% change Inc/

(dec)

Revenue 11,700,506 11,298,899 4%

Profit before taxation and non-controlling interests 3,540,525 3,707,533 (5%)

Taxation 48,552 (552,114) 109%

Total comprehensive income 3,589,077 3,155,419 14%

Non-controlling interests (12,620) (38,369) (67%)

Profit attributable to equity holders of the company 3,601,697 3,193,788 13%

Shareholders’ funds 36,132,780 33,493,666 8%

Earnings per share (kobo) 210 186 13%

Net assets per share (Naira) 21 24 13%

Market price per share as at 31st December (Naira) 9.50 19.00 (50%)

Market capitalization 13,062,500 26,125,000 (50%)


UPDC profile

UACN Property Development Company (UPDC) operated first as a division of UAC of Nigeria Plc until 1997, when the business was incorporated as a public limited liability company and subsequently listed on the Nigerian Stock Exchange in 1998.

UPDC’s strategic thrust is the development and management of luxury, premium and classic apartments in selected cities in Nigeria. We approach property planning from the customers’ perspective to create comfortable living/working environments.

Our current portfolio includes residential and commercial properties in Lagos (Cameron Green, Ikoyi; Metro Gardens, Lekki; Grandville, GRA – Ikeja; KPMG Towers, VI etc.), Abuja (Salatu Royal Estate, Wuse II; Emerald Court, Apo; Metro City, Apo; Securities & Exchange Commission Office, Central Business District etc.) and Port Harcourt (Vintage Gardens, NAFF Estate).

We are committed to managing our short to long term environmental responsibilities both towards the communities in which we operate and towards future generations.

Our business model is premised on project development and delivery through direct investment and joint ventures.

Ongoing Projects• Festival Mall, Amuwo Odofin – Lagos

• The Residences @ Festac – Lagos

• Olive Court, Agodi GRA – Ibadan

• The Pinnacle, Maitama – Abuja

• Pineville, Asaba

• Golf Estate, Calabar

Upcoming Projects• Victoria Mall Plaza Phase (Multi-storey Car Park and Event Centre), Victoria Island – Lagos

• James Pinnock Place, Lekki – Lagos

• Alexander Miller Apartments, Lekki – Lagos

Contact DetailsUAC House (3rd & 4th Floors)1-5 Odunlami Street, P. O. Box 156, Lagos Telephone: +234 1 791 9010; +234 1 291 1792Customer Care Line: +234 1 738 9363 Email: [email protected]; Web Address: www.updcplc.com


Mr. Larry Ettah, 51

Mr Ettah started his career as Management Trainee in UAC of Nigeria Plc in 1988. He has held several senior management positions in UAC of Nigeria Plc and was appointed an Executive

Director of UAC of Nigeria Plc in 2004. He became the Group Managing Director/Chief Executive Officer of UAC of Nigeria Plc on 1st January 2007.

He holds B.Sc. degree in Industrial Chemistry (1985); MBA (1988) both from University of Benin. He is a graduate of the renowned Executive Programme of Ross School of Business, University of Michigan. He also has attended Executive Education Programmes at Graduate School of Business, Stanford University, Harvard Business School, USA and IMD Lausanne, Switzerland. He is the President of Nigeria Employers Consultative Association (NECA). He joined the Board in 2007. He is the Non-Executive Chairman of the Board.


Mr. Hakeem D Ogunniran, 52

Mr. Ogunniran, Lawyer, Chartered Secretary and Fellow of the Chartered Institute of Arbitrators, holds LL.B, LL.M, and MBA degrees of the University of Lagos. He was called

to the Nigerian Bar in 1985. He was formerly a Law Lecturer at the University of Lagos. He joined UAC of Nigeria Plc. as Manager, Legal Services in 1995 and was later appointed as Western Area Manager and Marketing Manager respectively of GBO/MDS Division of UACN. He was the Divisional Managing Director of MDS Logistics Division of UACN and a Past President and Chairman of Council of the Institute of Chartered Secretaries and Administrators of Nigeria. A former Fulbright Scholar at Yale School, he has attended various Senior Management and Leadership programmes at Ashridge Management College, UK, Cranfield University, Harvard Business School and London Business School.

He was appointed the Managing Director of the Company in January, 2010.

Mrs. Halima T Alao, 58

Mrs Alao graduated with B.Sc (Hons) and M.Sc (Architecture) from Ahmadu Bello University, Zaria. She also holds a Master Degree in Public Administration from the University of Ilorin.

She is an alumnus of the Advanced Management and Leadership Programme of Oxford University Business School. She is a member of the Nigeria Institute of Architects. She served the nation variously as Sole Administrator/Chairman, Ilorin South Local Government, Permanent Secretary, Kwara State Ministry of Land & Housing, Permanent Secretary, Kwara State Ministry of Works and Transport, Executive Secretary, Kwara State Commission for Women, Honourable Minister of State for Education, Minister of State for Health, and Honourable Minister of Environment, Housing and Urban Development. She is the director of Tham Girl-Child Foundation.

She joined the Board in January 2010 as a Non-Executive Director.


Mr. Abdul Akhor Bello, 54

Mr. Bello is a fellow of the Institute of Chartered Accountants of Nigeria. He has attended leadership programmes at Cranfield University, The Wharton

School of the University of Pennsylvania and Harvard Business School. He is an alumnus of Oxford University’s Advanced Management and Leadership Programme. Mr. Bello worked variously as Chief Accountant, Inlaks Plc; Chief Accountant and Financial Controller, Grand Cereals Limited; Senior Group Accountant, UACN; Finance Director & Company Secretary and later Managing Director of CAP Plc. He is also a Non-Executive Director of Skye Bank Plc. He was the Managing Director of the company from November 2007 until his elevation to the Board of UACN Plc as Chief Financial Officer in January 2010. He is a Non-Executive Director of the company.

Mrs. Folasade O Ogunde, 52

Mrs. Ogunde, graduated with a B.Sc (Hons) degree in Economics from University of Ife (now Obafemi Awolowo University) Ile-Ife. She is a fellow of the Institute of Chartered

Accountants of Nigeria (ICAN) and holds the FMP certification from the International Facility Management Association (IFMA). She started her professional career with the firm of Deloitte Haskins & Sells (Chartered Accountants), where she gained accounting and audit experience, had a stint in treasury management with a finance company before joining UAC of Nigeria Plc in 1997. She has held such positions as Management Accountant, UAC Foods, Divisional Commercial Director, Mr Bigg’s (now UAC Restaurants) and Group Treasurer, UAC of Nigeria Plc. She has attended senior management and leadership programmes at Ashridge Management College, UK; Cranfield University, UK and Harvard Business School, USA.

She was appointed as the Finance Director of the Company in 2005.


Prof. Okon A. Ansa, 63

Professor Okon A. Ansa was educated at King’s College, Lagos and at Ahmadu Bello University, Zaria where he graduated with a B.Sc (Hons)

in Agriculture in 1974 and an M.Sc in Crop Protection in 1977. He obtained a Ph.D in Plant Pathology from University of California, Davis, California, USA. He is a seasoned administrator who has served as Head of academic departments and units in Universities at Zaria, Calabar and Uyo. He was Dean of the Faculty of Agriculture and later Director of Academic Planning before his elevation to the position of Deputy Vice-Chancellor at the University of Uyo.

He has served as Commissioner for Agriculture and Commissioner for Commerce and Industries in Akwa Ibom State. He has also held a number of positions in corporate Nigeria as Chairman, Akwa Palm Industries Limited; Member, Board of ADC Airlines; Chairman, Ibom Power Company Limited; Member, Akwa Ibom Industrial and Investments Promotion Council. Prof. Okon Ansa holds the national honour of Officer of the Order of the Federal Republic (OFR).

He joined the board as a Non-Executive Director on March 26th, 2013.

Mr Adekunle O Awojobi, 48

Mr. Awojobi is a Fellow of the Institute of Chartered Accountants of Nigeria, Nigeria Institute of Management, Certified Fraud examiner and

Member Institute of Internal Auditors. He also holds a Bachelors of Science degree in Economics with First Class Honours from Ogun State University (now Olabisi Onabanjo University) Ago-Iwoye, Ogun State. Prior to joining FBN Trustees Limited in 2002, he was an Audit senior with KPMG audit (1996 - 1997) and Internal Auditor Carnaud Metalbox (Now Nampak) Nigeria Plc (2000 - 2002).

He joined First Trustees in 2002 as Manager, Operations and was later promoted to Senior Manager, Operations based on his outstanding performance. He was then moved to head the Capital Markets & Projects Unit of Investment Department. In February 2007, he was appointed Head, Operations & IT and promoted to Assistant General Manager. In August 2012, he was appointed the Managing Director, the position he holds till date. He has attended various courses within and outside Nigeria. He was alternate Director for several years before his appointment as a substantive Non-Executive Director on 17th December 2012.


ChairmanUPDC ANNUAL REPORT 17

Chairman’s letter to stakeholders

Fellow shareholders, invited guests, gentlemen of the press, distinguished ladies and gentlemen, it gives me pleasure to welcome you all to the 17th Annual General Meeting (AGM) of our Company, UACN Property Development Company (UPDC) Plc holding today September 01, 2015, at the Arthur Mbanefo Hall, Golden Tulip Festac Hotel, Amuwo Odofin, Lagos.

Please permit me to do a quick review of the global and national business environments, within which our Company operated in 2014, before presenting to you the Annual Report and Financial Statements for the year ended 31st December 2014.

The Global EconomyThe global growth rate in 2014 was 2.9% compared to the 3.2% forecast by the International Monetary Fund (IMF) in its World Economic Outlook (WEO) report. The protracted recession in the Euro zone coupled with the structural bottlenecks in infrastructure, labour markets and investments in many emerging markets accounted for the global slowdown.

Instability in the global financial market became marked with longer term interest rate hike and financial market volatility in the advanced economies. As the Euro zone sovereign debt crisis unfolded, emerging market economies bore the brunt as increases in interest rate and asset price volatility in the advanced economies combined with weakened domestic demand heralded capital outflows, equity price decline, rising local yields and currency depreciation.

In the second half of the year, the global crude oil prices virtually collapsed as the impact of shale oil discovered in the United States manifested with negative consequences on the international price of crude oil.

The Nigerian EconomyAccording to the CBN’s statistics, Nigeria’s GDP grew by 6.35% in 2014. The Non-oil sector of the economy remained the principal driver of the economic activities during the period. The nation’s GDP rebasing exercise confirmed Nigeria as the largest economy in Africa with a GDP of $509.97 billion (N80.22 trillion). The GDP rebasing further indicated that Nigeria is one of the least leveraged countries in the world, with a revised Debt-to-GDP ratio of 11% from 20%.

The growth rate of the non-oil sector stood at 7.51% in Q4 2014, lower than 8.46% recorded in the corresponding period of 2013, but higher than 6.71% in Q2 2014. The Non-oil sector growth was driven by increased activities in crop production, textile, telecommunications, apparels & footwear and real estate sectors.

The oil sector’s supply-related disruptions continued during the year. The macro headwinds arising from crude oil price shocks made almost all economic indices head southward with exports down by 12.30%, revenue down by 45.10%, reserves down by 20.07% and FDI down by 17.91%. Our foreign reserves declined from US$42.85bn at the end of December 2013 to US$34.25bn by the end of December 2014.

Despite the initial insistence of the CBN to defend the value of the Naira, the demand pressure at the forex market remained unabated thereby leaving the CBN with no option than to devalue the Naira by 7.74% thus moving the mid-point of the foreign exchange rate from N155 for one US Dollar (US$1) with a band of +/-3% to N168 for one US Dollar (US$1) with a band of +/-5%.


The macro headwinds responsible for the eventual devaluation of the Naira were the level of demand from the foreign portfolio investors due to the declining price of crude oil and the negative impact it had on the external reserves as well as the perceived upward swing in country risk.

The capital market witnessed free fall of equities prices throughout the year. The NSE index was down by 14.70% as investors lost about N1.6trn in value. Inflation however stabilized at 8% as at December 2014.

The Nigerian Real Estate IndustryIn recent years, foreign private equity firms have invested millions of dollars in the Nigerian Real Estate market, especially in the commercial and hospitality sectors, evidenced by increase in the construction of numerous shopping malls with at least 18 medium sized malls constructed / under construction around the country.

This interest in the Nigerian market is as a result of huge demand buoyed by increasing urban population and changing shopping culture among the expanding middle class.

With an estimated housing deficit of 17 million units in the country, the World Bank has estimated that it would cost as much as N59.50 trillion to bridge the housing gap. This huge deficit figure may also be viewed as a vast and untapped investment potential of the country’s real estate sector.

The real estate market is gradually rebounding and has experienced reasonable growth and performance in the last few years. This performance is largely driven by the re-emergence of the Nigerian middle-class and the increasing demand for decent residential and commercial accommodation by high net-worth individuals, corporate organizations and key players in the retail segment of the economy.

Growth in the sector has been enhanced by the entrance and expansion of new and existing multinational companies in such sectors as ICT, Oil & Gas, Retail merchandising and Finance. The upturn in economic activity; experienced from Q4 2011 to date, has led to an increase in demand and supply for commercial and high-

end residential developments, particularly in the key cities of Abuja, Lagos and Port Harcourt.

The Nigerian market remains attractive as there are significant untapped potentials in the residential segment, and numerous opportunities in the hospitality, retail, commercial and industrial segments of the market in the near term.

However, the challenges being faced by the industry in terms of title uncertainties, high cost of funding, inadequate mortgage financing and poor infrastructure are expected to persist in the medium term and will continue to prevent effective demand in the low/medium residential market segments.

Our People The Company’s long-term success is dependent upon the diversity, dedication and commitment of all our people. We have invested in the development of succession plans and talent development. We have ensured that our people share a common set of values captured in our Code of Business Ethics. We have further made good progress in Health and Safety area both in terms of safe working practices on our project sites and the reporting of performance.

Review of OperationsDespite the challenging business environment, the Company continued its ongoing developments in 2014 and commenced some new ones.

Phase 1 of Vintage Gardens, Port Harcourt, comprising of 54 units of mixed residential apartments was completed in 2014. The Port Harcourt real estate market remained soft throughout the year which did not encourage the commencement of Phase 2 of the project. The market picked up dramatically in the first quarter of 2015 and the outstanding units have since been sold.

In the premium residential category, we commenced construction work on the 50-unit Olive Court, Agodi Ibadan, a joint venture with the Oyo State Government and the 20-unit Pineville in Asaba. The projects are being executed in phases and we expect to deliver Olive Court Phase 1 & 2 and the Pineville this year.


The refurbishment of Festac Block B into 192 residential apartments (named The Residences) started in September 2014; 33 units were completed in 2014. Work is at an advanced stage of completion and we plan to deliver the remaining units in the last quarter of 2015.

Construction work also commenced on Golf Estate, Calabar, towards the end of 2014. This is a 200-unit residential development located at Summit Hills, Calabar and being executed in joint venture with the Cross River State government. The project is planned for phased completion over 3 years.

In the luxury residential category, work is far advanced on the Pinnacle Apartments, Maitama, Abuja. Finishing works are currently in progress and we expect to deliver the estate to buyers before the end of 2015.

On the retail side of business, our Festival Mall project is at an advanced stage of completion and finishing works and fitting-out have commenced on the shops. Beneficial Occupation (BO) has been given to anchor tenant, Shoprite, Silverbird Cinemas and key line customers. The mall is 96% pre-let and scheduled for commissioning in the 3rd quarter of 2015.

However, the performance of our hotel in 2014 fell below 2013 in terms of occupancy and revenue; even though gross profit and PBT were relatively better. The opening of Festival Mall and completion of the Block B apartments (The Residences) are complementary deliverables expected to drive more traffic to the hotel and improve its performance in the foreseeable future. The completion by Government of ongoing road and rail works in the neighbourhood of the hotel will be very helpful.

Financial Performance and DividendThe Company posted revenue of N10.08b (Group N11.70b) as against 2013 revenue of N9.33b (Group N11.29b).

Profit before taxation (PBT) was N2.04b (Group N3.54b) against N4.38b (Group N3.71b) in 2013.

In the light of these results, the Board of Directors hereby recommends for your consideration and approval a dividend of N859,375,000 representing 50 kobo per ordinary share held by members as at August 14, 2015.

Outlook for 2015Political uncertainties of late 2014 and the first half of 2015 have abated. There was euphoria over the success of the general elections and the new government anchored on a ‘’change” platform which promised to tackle the ills of corruption, insecurity and economic mis-management. The new government needs to steadily move to address the expectations of the citizenry.

The macro-economic indicators are negative –external reserves are down; headline inflation has increased to 9% and the equities market has experienced a free fall with the NSE All Share Index declining by 3.4% compared with 2014. The Naira exchange rate to the USD has been volatile and worsened by more than 20% in the first half of 2015 and the CBN’s interventions have generally been ineffective. Interest rates have remained high with bank lending and mortgage rates as high as 28% for certain classes of borrowers.

Analysts are predicting a further depreciation in the value of the Naira, increase in the debt position of the FGN, further decline in oil price and revenue and a spike in inflation rate to 12% by year end. The projected GDP growth rate of 5% for the year has therefore been revised down to 3.8%. This may be further hampered by the lingering challenges of insecurity, vandalism, oil theft and shortage of petroleum products.

The performance of our company has been less than satisfactory, a reflection of the general macro challenges confronting our industry. Turnover and profit performance for both the company and the hotel fell below last year. The Ebola crisis of 2014, socio-political uncertainties of 2015 and delayed execution of government road works and ancillary infrastructure upgrade in the Festac/Mile 2 vicinity have impacted the hotel business negatively, with annual room occupancy declining from an average of 44% in 2013 to 31% (Jan-June 2015), short of projected levels.


A decision was taken to impair the N2.08b equity value of UPDC’s investment in the hotel. A professional valuation of the hotel is currently underway and expected to be concluded before end of September 2015. Any further adjustment arising from the valuation exercise will be passed into 2015 accounts.

Our expectation is that the opening of Festival Mall and completion of The Residences (Block B) will have a positive rub-off impact on the hotel’s performance in future. In that event, the impairment taken at this time may be reversed in part or fully, premised on market valuations.

The Board and Management of UPDC remain focused on long term value creation and we have put in place strategies to mitigate the envisaged risks as well as take advantage of emerging opportunities in the market place.

Our strategy for 2015 and beyond include deleveraging the business through equity capital injection, disposal of the surplus stake currently held in UPDC REIT (21.5%) to generate liquidity and re-creating our products portfolio to include more commercial and retail offerings which have proven to be more resilient revenue sources in periods of depression.

AppreciationI wish to thank you, our esteemed Shareholders for your unwavering interest in our Company.

I also thank all our customers, consultants, contractors and other stakeholders for your continuing support.

Finally, I thank my colleagues on the Board for providing the required leadership and direction for the Company.

I thank you all for your attention.

Larry Ephraim EttahChairmanFRC/2013/IODN/00000002692


Directors’ report

Principal activitiesPrincipal activities of the company are to acquire, develop, sell and manage high quality, serviced commercial & residential accommodation and retail space.

Operating results

2014 2013 % change Inc/(dec)

N’000 N’000

Revenue 11,700,506 11,298,899 4%Profit before taxation 3,540,525 3,707,533 (5%)Taxation 48,552 (552,114) 109%Profit after taxation before non-controlling interests 3,589,077 3,155,419 14%Non-controlling interests (12,620) (38,369)Profit after taxation and non controlling interests 3,601,697 3,193,788 13%Dividend proposed 859,375 962,500 (11%)

DividendThe directors recommend to the shareholders, the declaration of a dividend of N859,375,000, representing 50 kobo per share.

Directors’ interests in shares

31 December 2014 31 December 2013

Direct holdings In-direct holdings

Direct holdings In-direct holdings

Mr. Larry Ephraim Ettah 2,861,023 790,625,000 2,849,783 632,500,000Mr. Hakeem Dele Ogunniran 250,781 - 200,625 -Mrs. Folasade Oluwatoyin Ogunde 183,750 - 182,950 -Mr. Abdul Akhor Bello 156,250 - 125,000 -Mr. Adekunle Olakitan Awojobi - 148,602,252 - 153,393,802Mrs. Halima Tayo Alao 39,493 - 31,593 -Prof. Okon A. Ansa - - - -

3,491,297 939,227,252 3,389,953 785,893,802


Analysis of Shareholding

Members shareholding

Shareholders number

Shareholding number

Shareholding percent

Directors and connected persons 7 3,491,297 0%UAC of Nigeria Plc 1 790,625,000 46%FBN Trustees Nigeria Ltd 1 148,602,252 9%Individuals 25,195 438,861,172 26%Other corporate bodies 2,697 337,170,274 20%

27,901 1,718,749,995 100%

Corporate Social Responsibility (CSR) ReportUPDC, as a member of the Nigerian Conservation Foundation (NCF) co-sponsored the 2014 “Walk for Nature” which took place on 18th October, 2014. The event whose theme was “Small Island Development States” was very colourful and involved students from various schools. Walk for Nature is an annual event organized by the Lagos State Ministry of Environment in collaboration with the NCF.

Donations & SponsorshipsThe following donations and sponsorships were made during the year:

N

The Nigerian Institute of Estate Surveyors and Valuers (Rivers State Branch) 50,000National Infrastructure Building Conference 250,000International Federation of Women Lawyers (FIDA) Nigeria (Lagos State Branch) 250,000NIESV Annual Conference 500,000Association of Professional Women Engineers 150,000PSRG/Richardson HSSE Forum 300,000Lagos State Ministry of Physical Development 500,000Oyo State Economic Summit 1,000,000Nigeria British Chamber of Commerce (Centenary Celebration) 200,000

3,200,000

Employment policy, employee welfare, safety & environmental issues

It is a pivotal policy of the Company that there is no discrimination in the employment, training and career development of all categories of employees in terms of gender, race, ethnicity, tribe, religion or creed in compliance with constitutional provisions. Hence, our company has a diverse and inclusive workforce.


Being an equal opportunity company, UPDC is committed to:• Encouraging and assisting each employee develop his/her ability in his/ her chosen career• Recognizing the freedom of employees to form and/or join responsible and truly representative Trade Unions or

Associations.

Health and SafetyIt is our policy to ensure that our employees work in safe and clean environments. Hence, our Company has provided at the corporate head office, estates and project sites very conducive and safe work environments. The Company enforces strict adherence to safety rules and practices by periodically training its work force on safety, environmental, social and health issues. We also conduct free basic health screening for our employees from time to time.

HIV/AIDSOur Company maintains occupational health by providing basic HIV/AIDS awareness training. We do not discriminate against any employee on the basis of his/her HIV status. The HIV status and medical records of individuals are kept strictly confidential.

WelfareThe Company provides free medical care for employees and their immediate families, as applicable under the UACN Medical scheme.Work is organized in flexible manner to enable our employees enjoy work-life balance. This enables employees meet up with their social and family obligations. Employees also enjoy subsidized lunch. The Company operates a crèche on a non-profit basis to assist nursing mothers. Male employees also enjoy a week’s paternity leave when their pregnant wives deliver their babies. Closed User Group (CUG) phone facilities assigned to employees have also been extended to cover Managers’ spouses for ease of communication while at work.

Relations with employees and internal management structureOur employees are fully involved in strategy formulation and execution. This fosters business plan ownership and commitment at all levels. Management and Staff Retreats, Joint Consultative Committee (JCC) Meetings, Business Review Meetings, Village Meetings, Project Integration Meetings and Leadership Team Meetings are held for cross-exchange of ideas and critical business information.

Employee recognition and incentive schemeManagement openly acknowledges and recognizes employees who have performed exceptionally well in the course of each year. Cash gifts are often awarded for individual and team performances. Management has also established an incentive scheme for Project Managers upon successful completion of projects within specified time and budget. A Sales Incentive Scheme was recently put in place and covers all employees with UPDC and across the UACN group. All these initiatives boost employee morale which in turn impacts productivity.

Employee engagement, development and trainingOur policy recognizes human resources as the most important resource of the organization. Retention and motivation of our skilled work force is achieved through systematic training and development. Out Company provides general, professional and leadership training as well as tuition reimbursement support to employees that undertake approved self-development and professional development programmes. We pride ourselves as an organization that encourages learning-by-doing through planned on-the-job coaching and mentoring schemes thereby paving the way for career advancement opportunities for our employees.


Corporate governance report

By the Articles of Association of the Company (“the Articles”), the Board is responsible for controlling and managing the business of the Company. It may exercise such powers of the Company as are not by statute or the Articles to be exercised by the Company in General Meeting. We conduct our business in full compliance with the laws and regulations of Nigeria and our Code of Business Principles and Ethics.

Under the UPDC Board Charter “the primary objective of the Board of Directors (‘Board’) of UACN property Development Company Plc (UPDC) is to build long-term shareholder value with due regard to other stakeholder interests. It does this by setting strategic direction and context, such as UPDC’s mission, vision and core values, policies and objectives and focusing on issues critical for its successful execution such as staffing, executive training, succession planning, performance and risk management”.

Composition of the Board of DirectorsThe Board of UPDC Plc is made up of five Non-Executive Directors and two Executive Directors.

All the directors have access to the advice and services of the Company Secretary. With the approval of the Chairman of the Board, all Directors are entitled to take advice from external professionals in areas where such advice will improve the quality of their contributions to Board deliberations and decision-making process.

Separation of the positions of Chairman and Managing DirectorThe position of the Chairman is distinct from that of the Managing Director. The Chairman of the Board is Mr Larry Ephraim Ettah, who is a Non-Executive Director, while the Managing Director is Mr Hakeem Dele Ogunniran. The other Executive Director is Mrs Folasade Oluwatoyin Ogunde, the Finance Director. Mrs Halima Tayo Alao is an independent Director. The other Non-Executive Directors are Mr Abdul Akhor Bello, Mr Adekunle O Awojobi and Prof. Okon A Ansa.

The Roles and Responsibilities of the BoardThe following are the matters reserved for the Board of Directors of the Company:

a) Formulation of policies, strategy and overseeing the management and conduct of the business.

b) Formulation and management of risk management framework.

c) Succession planning and the appointment, training, remuneration and replacement of Board members and senior management.

d) Overseeing the effectiveness and adequacy of internal control systems.

e) Overseeing the maintenance of the Company’s communication and information dissemination policy.

f ) Performance appraisal and compensation of board members and senior executives.

g) Ensuring effective communication with shareholders, stakeholders, the investing public.

h) Ensuring the integrity of financial controls and reports.

i) Ensuring that ethical standards are maintained.


j) Ensuring compliance with the Company’s Memorandum and Articles of Association, applicable laws, regulations, standards and Code of Corporate Governance by the Company and its Business Units.

k) Definition of the scope of delegated authority to Board Committees and management and their accountabilities.

l) Definition of the scope of corporate social responsibility through the approval of relevant policies.

m) Approval and enforcement of a Code of ethics and business practices for the Company and Code of conduct for Directors.

Board AppointmentThe process of appointing Directors involves a declaration of a vacancy at a Board Meeting; the sourcing of the curriculum vitae of suitable candidates depending on the required skills, competence and experience at any particular time; and the reference of the curriculum vitae to the Risk & Governance Committee for necessary background checks, informal interviews/interaction and a recommendation for the approval of the Board of Directors. Director appointed by the Board is presented to the next Annual General Meeting of the members of the Company for election.

Directors’ Induction and Training Every newly appointed Director receives a comprehensive letter of appointment detailing the terms of reference of the Board and its Committees, the Board structure, schedule of Board meetings, his entitlements and demand on his time as a result of the appointment. The letter of appointment is accompanied with the Memorandum and Articles of Association of the Company, the previous Annual Report & Accounts, the Code of Corporate Governance for Public Companies in Nigeria, UACN Code of Business Ethics, and other documents, policies, processes and procedures that help the Director to gain an understanding of the Company, its history, culture, core values, governance framework, business principles, people, operations, brands, projects, processes and plans. A new Director undergoes an induction/orientation process whereby he is introduced to the members of the Board of Directors and leadership teams of UPDC, Corporate Head Office and Subsidiary Companies. Project visits are also arranged for the new Director to get acquainted with business operations. All the Directors attended training on Enterprise Risk Management (ERM) and International Financial Reporting Standards (IFRS) during the financial year. All the Directors have recently attended UAC Group Board Retreat focused on board effectiveness, strategy and recent developments in corporate governance facilitated by a faculty from the International Institute for Management Development (IMD), based in Switzerland.


Board MeetingsThe Board met six (6) times during the year. The following is the list of the directors and their attendance at the Board meetings:

DIRECTORS 24/3/14 29/4/14 4/6/14 31/7/14 28/10/14 2/12/14

Mr. Larry E Ettah P P P P P PMr Hakeem D Ogunniran P P P P P PMr. Abdul A Bello P P P P P PMrs. Folasade O Ogunde P P P P P PMr. Adekunle Awojobi P P P P P PMrs. Halima Tayo Alao P P P P P PProf. Okon A Ansa P P P P AWA P

Key: P = Present

AWA = Absent With Apology

Board EvaluationA Board performance evaluation was undertaken in 2014. The Board was pleased with the performance of its team, board committees and individual directors. Necessary feedbacks were given to individual directors arising from the exercise.

Composition of Board Committees The Board functioned through the Risk & Governance Committee and the Finance & Projects Committee. All Board Committees make recommendations for approval by the full Board.

1) The Risk & Governance Committee The Committee is chaired by Mr Kunle Awojobi, a Non-Executive Director, and made up of one other Non-

Executive director, the Managing Director and Finance Director.

The Terms of Reference of the Committeei) Oversees risk management within the group and is responsible for developing and monitoring an enterprise risk

management framework for identifying, measuring, monitoring and controlling risks in the Company and group.

ii) Monitors and reviews the effectiveness of the Company’s annual audit review in the context of the Company’s overall risk management system.

iii) Reviews and assesses the annual internal and external audit plans.

iv) Reviews the recommendations of the Internal Auditor and the External Auditor and management’s responses thereto and monitors the implementation of audit comments by management and makes recommendations to the Board.


v) In line with the UACN group policy gives consideration to succession planning for directors in the course of its work taking into account the challenges and opportunities facing the Company and what skills and expertise are needed on the Board in the future.

vi) In line with the UACN group policy, determines and agrees with the Board the framework or policy for the remuneration of the Company’s Chief Executive, Chairman, the Executive Directors and members of the executive management team as it is designated to consider. The remuneration of the non-executive directors is a matter for the Chairman and the Executive members of the Board. No director or manager is involved in any decision as to his or her own remuneration.

vii) Annually evaluates and reports to the Board on the performance and effectiveness of the Board and Board Committees to facilitate the directors fulfilling their responsibilities in a manner that serves the best interests of the Company’s shareholders.

viii) Assists the Chairman of the Board in leading the Board’s annual review of the performance of all Directors.

ix) Annually reviews the composition of Board committees and present recommendations for committee memberships to the Board Chairman as needed.

x) Develops, periodically reviews and recommends to the Board appropriate revisions to the Company’s corporate governance framework, including its Memorandum and Articles of Association, Bye-laws, and Corporate Governance Guidelines.

xi) Monitors compliance by the Company with the laws and regulations in force and the Corporate Governance Code(s).

xii) Regularly reviews and makes recommendations about changes to Board and Board Committee charters.

xiii) Annually reviews the Company’s policies and programs that relate to corporate governance, corporate citizenship, including environmental sustainability, corporate social responsibility, etc and makes recommendations to the Board.

xiv) In line with the UACN group policy it is responsible for the continuing education of board members.

Committee’s MeetingsThe Risk & Governance Committee met three (3) times during the year. The following table shows the meetings and the attendance of the committee members at such meetings:

DIRECTORS 9/3/2014 31/7/14 20/10/14

Mr Hakeem D Ogunniran P P PMrs. Folasade O Ogunde p P PMr. Adekunle Awojobi P P PProf. Okon A Ansa P P P

Key : P –Present


2) Finance & Projects Committee The Finance and Projects Committee is chaired by Mr Abdul Bello, a Non-Executive Director and made up of two

other Non-executive directors, the Managing Director and the Finance Director.

The Terms of Reference of the Committeei) To assist the Board in making investment and capital expenditure decisions in pursuance of strategic objectives.

This entails the following sub-responsibilities:

a) To review and evaluate management requests for approval of capital expenditure regarding the purchase, development and construction of projects and make appropriate recommendations to the Board.

b) To review, evaluate and make recommendations to the Board for debt and other financing alternatives for projects.

c) To monitor and review justification for project costs overruns and requests for supplementary budgets.

d) To report to the Board on its activities, recommendations and decisions

ii) To assist the Board satisfy itself about the validity of technical and market prospects for projects and investment initiatives. This entails the following sub-responsibilities:

a) To challenge and obtain necessary assurances from management and contractors in respect of project viability, technical quality and completeness of plans, project cost structures, monitoring and reporting arrangements, project management, contingency planning and provisions, risk assessment and risk management processes.

b) To advise the Board on above matters prior to the submission of the projects to the Board for final approval and make recommendations as appropriate.

c) Following approval of projects, continue to assist the Board in its oversight of the projects by reviewing project status and providing regular updates and reports to the Board and advising the Board accordingly.

Committee’s MeetingsThe Finance & Projects Committee met four (4) times during the year and the following chart shows the attendance of committee members at the meetings:

DIRECTORS 20/2/2014 22/4/14 22/7/14 14/10/14

Mr. Abdul A Bello P P P PMrs. Halima Tayo Alao P P P PMr Hakeem D Ogunniran P P P PMrs. Folasade O Ogunde P P P PMr. Kunle Awojobi P P P p

Key : P - Present


MANAGEMENTThe Executive Management of the Company gains group insight from presenting the Company’s draft annual budget to the Group Executive Management and the Board of Directors of the parent Company. The Chairman of the Board attends the Annual Management Conference of the Company to give the employees feedback from the UACN Board on Company’s performance in the previous year, corporate strategy, business direction and performance expectation for the new year. The Managing Director attends the monthly UACN group Business Review meetings where Company’s performance, business issues and plans are reviewed and direction given. The leadership team of the Company also attends the Annual UACN Group Business Retreat where strategic and operational business issues are discussed with clear direction and action plans. Within the Company, accountability meetings and reviews are held on a weekly, monthly and quarterly basis. These include the weekly meetings of the leadership team, monthly business review and project review meetings and periodic village meetings. Employees of the Company also join their peers within the UACN Group for Finance & IT Managers review, Human Resource Managers meetings, Legal Risks, Compliance and Cost review meetings, and quarterly marketing & sales conferences.

THE STATUTORY AUDIT COMMITTEEThe statutory Audit Committee consists of six members made up of three representatives of the shareholders elected at the previous Annual General Meeting for tenure of one year and three representatives of the Board of Directors. The Chairman of the Committee is Alhaji Gbadebo Olatokunbo, a shareholders’ representative. The Company Secretary is the Secretary of the Committee. The meetings of the Committee which are held quarterly are attended by representatives of KPMG Professional Services, our Internal Audit Service Provider, PricewaterhouseCoopers, our Independent/External Auditor and the Risk & Compliance Manager of the Company.

Committee’s MeetingsThe following table shows members’ attendance at the four meetings of the committee in 2014:

DIRECTORS 14/1/14 24/3/14 23/7/14 8/10/14

Alhaji Gbadebo Olatokunbo P P P PMr. Joe O Anosikeh P P AWA PMrs. Folasade O Ogunde P P P PMr. Abdul A Bello P P P PPof. Okon A Ansa - - p PEngr. Fawole T Ganiyu - - P P

Key:

- - Not Yet A Member

AWA - Absent With Apology


The Terms of Reference of the CommitteeThe following are the terms of reference of the Committee:

The Committee is authorized by CAMA to:

a) Ascertain whether the accounting and reporting policies of the Company are in accordance with legal AT requirements and agreed ethical practices;

b) Review the scope and planning of audit requirements;

c) Review the findings on management matters in conjunction with the external auditor and departmental responses thereon;

d) Keep under review the effectiveness of the company’s system of accounting and internal control;

e) Make recommendation to the Board with regard to the appointment, removal and remuneration of the External Auditors of the Company;

f ) Authorize the Internal Auditor to carry out investigations into any activities of the Company, which may be of interest or concern to the Committee.

g) Receive quarterly/periodic reports from the Internal audit unit.

In addition, the 2011 Code of Corporate Governance also assigns specific responsibilities to the Committee.

Control environment A group-wide Risk & Compliance Unit has been established at the Corporate Centre and in all subsidiary Companies to ensure a stronger control environment. The outsourced Internal Audit and Whistle Blowing services to KPMG Professional Services are working effectively and adding great value to the business.

Trading in Security Policy In compliance with the Rules of the Nigerian Stock Exchange (NSE), we have put in place a Securities Trading Policy to guide employees and Directors of the Company, persons closely connected to them, and all insiders of the Company on trading in the securities of the company. Under the policy, the closed period shall be effective from 15 days prior to the date of any meeting of the Board of Directors proposed to be held to consider any of the following matters, or the date of circulation of agenda papers pertaining to any of the said matters whichever is earlier, up to 24 hours after the price sensitive information is submitted to the NSE. The trading window shall thereafter be opened:

a) Declaration of financial results (quarterly, half-yearly and annual);

b) Declaration of dividends (interim and final);

c) Issue of securities by way of public offer or rights or bonus etc;

d) Any major expansion plans or winning of bid or execution of new projects\disposal of the whole or a substantial part of the undertaking;

e) Any changes in policies, plans or operations of the company that are likely to materially affect the prices of the securities of the company;

f ) Disruption of operations due to natural calamities;

g) Litigation/dispute with a material impact;UPDC ANNUAL REPORT 31

h) Any information which if disclosed in the opinion of the person discharging the same is likely to materially affect the price of the securities of the company.

We hereby confirm that no Director traded in the securities of the company within the closed period.

Shareholders Complaints Management PolicyWe have put in place a Complaints Management policy to handle and resolve complaints from our Shareholders and investors. The policy was defined and endorsed by the company’s senior management, who is also responsible for its implementation and for monitoring compliance. The policy has been posted on the Company’s website and shall be made available to shareholders of the company at the Annual General Meeting.

Compliance with the Code of Corporate Governance The Company has complied with the provisions of the 2011 Code of Corporate Governance For Public Companies In Nigeria.


Responsibility for annual financial statements

The directors of Updc Plc are responsible for the integrity of the annual financial statements of the company, consolidated subsidiary, associates and the objectivity of other information presented in the annual report.

The fulfillment of this responsibility is discharged through the establishment and maintenance of sound management and accounting systems, the maintenance of an organization structure which provides for delegation of authority and establishes clear responsibility, together with the constant communication and review of operational performance measured against approved plans and budgets.

Management and employees operate in terms of code of ethics approved by the board of UACN Plc. The code requires compliance with all applicable laws and maintenance of the highest integrity in the conduct of all aspects of the business.

The annual financial statements, prepared in line with International Financial Reporting Standards (IFRS), are examined by our auditors in conformity with International Standards on Auditing.

An audit committee which comprises of three representatives of the shareholders and three board members meets periodically with our internal and external auditors as well as management to discuss internal accounting controls, auditing and financial reporting matters. The auditors have unrestricted access to the audit committee.

The directors have no reason to believe that the company’s operations will not continue as going concern in the year ahead other than where closures or discontinuations are anticipated, in which case provision is made to reduce the carrying cost of the relevant assets to net realizable value.

Folasade Oluwatoyin Ogunde Hakeem Dele OgunniranFinance Director Managing DirectorFRC/2013/ICAN/000000000747 FRC/2013/ICSAN/00000001723


Report of the audit committee to the members of uacn property development company plc

In compliance with Section 359(6) of the Companies and Allied Matters Act CAP C20 Laws of the Federation of Nigeria, 2004, we have reviewed the audited Financial Statements of the Company for the year ended 31st December, 2014 and report as follows:

(a) The accounting and reporting policies of the Group and Company are consistent with legal requirements and agreed ethical practices.

(b) The scope and planning of the external audit for the year ended 31st December, 2014 were, in our opinion adequate

(c) We reviewed the findings and recommendations in the Internal Auditor’s Report and External Auditor’s Management Controls Report and we were satisfied with the management responses thereto.

(d) The Company maintained effective accounting and internal control system.

Dated 19th day of March, 2015

Alhaji Gbadebo Olatokunbo

Chairman - Audit Committee

Members of the Committee

Alhaji Gbadebo Olatokunbo - Chairman

Mr. Joe O. Anosikeh - Member

Mrs. Folasade Oluwatoyin Ogunde - Member

Mr. Abdul Akhor Bello - Member

Prof. Okon A. Ansa - Member

Engr. Fawole T. Ganiyu - Member

Secretary

Godwin A. Samuel, Esq. Prof. Ansa Mr. Anosikeh Alhaji Olatokunbo Mrs. Ogunde Engr. Fawole Mr. Bello


Report of the independent auditor to the members of uacn property development company plcReport of the financial statementsWe have audited the accompanying financial statements of UACN Property Development Company Plc (the company) and its subsidiaries (together, the group). These financial statements comprise the statement of financial position as at 31 December 2014 and the statement of comprehensive income, changes in equity and cash flows for the year then ended, a summary of significant accounting policies and other explanatory notes.

Director’s responsibility for the financial statementsThe directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and with the requirements of the Companies and Allied Matters Act and for such internal control, as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with International Standards on Accounting. Those standards require that we comply with ethical requirements and plan and perform our audit to obtain reasonable assurance that the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

OpinionIn our opinion the accompanying financial statements give a true and fair view of the state of the financial affairs of the company and the group at 31 December 2014 and of their financial performance and cash flows for the year ended in accordance with International Financial Reporting Standards and the requirements of the Companies and Allied Matters Act and the Financial Reporting Council of Nigeria Act.

Report on other legal requirementsThe Companies and Allied Matters Acts requires that in carrying out our audit we consider and report to you on the following matters. We confirm that:

i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

ii) the company has kept proper books of account, so far as appears from our examination of those books and returns adequate for our audit have been received from branches not visited by us;

iii) the company’s statement of financial position and statements of comprehensive income are in agreement with the books of account.

PricewaterhouseCoopersChartered AccountantsEngagement partner: Ikenna EzeukoFRC/2013/ICAN/00000000783

31 March 2015


Group Company2014 2013 2014 2013

Notes N'000 N'000 N'000 N'000

Revenue 5 11,700,506 11,298,899 10,081,316 9,328,425 Cost of sales 7 (9,870,826) (8,099,530) (8,434,341) (6,309,127) Gross profit 1,829,680 3,199,369 1,646,975 3,019,298 Fair value gain on investment properties 14 1,541,406 865,900 1,541,406 865,900 Gain on disposal of investment properties 14 486,857 2,764,991 486,857 2,764,991 Selling and distribution expenses 7 (219,240) (127,428) (57,265) (82,428) Administrative expenses 7 (1,367,260) (1,716,639) (801,675) (934,347) Other operating income 6 225,625 97,446 1,155,365 122,017 Operating profit 2,497,068 5,083,639 3,971,663 5,755,433 Finance income 8 721,787 638,051 721,787 637,798 Finance cost 8 (2,657,289) (2,014,157) (2,657,289) (2,014,157) Net finance cost (1,935,502) (1,376,106) (1,935,502) (1,376,359) Share of profit of associates 15 2,978,959 - - - Profit before taxation 3,540,525 3,707,533 2,036,161 4,379,074

Taxation 9 48,552 (552,114) 48,552 (552,114) Profit for the year 3,589,077 3,155,419 2,084,713 3,826,960Profit attributable to:Equity holders of the parent 3,601,697 3,193,788 2,084,713 3,826,760Non-controlling interest (12,620) (38,369) - - Total comprehensive income 3,589,077 3,155,419 2,084,713 3,826,960 Total comprehensive income attributable to:Equity holders of the parent 3,601,697 3,193,788 2,084,713 3,826,960 Non-controlling interests (12,620) (38,369) - -

3,589,077 3,155,419 2,084,713 3,826,960 Basic EPS (Kobo) 11 210 186 121 223Diluted EPS (Kobo) 11 210 186 121 223The results shown above for both 2014 and 2013 relate to continuing operations. The notes on pages 44 to 107 are an integral part of these consolidated financial statements.

Consolidated statements of comprehensive incomefor the year ended 31 December 2014


Group Company2014 2013 2014 2013

Notes N'000 N'000 N'000 N'000AssetsNon-current assetsProperty, plant and equipment 12 1 3,415,919 14,963,433 126,881 224,481 Intangible assets 13 30,353 - 20,806 - Investment properties 14 16,542,109 15,328,895 16,542,109 15,328,895 Investments in associates and joint ventures 15 19,100,575 17,991,240 17,051,356 17,991,241 Investments in subsidiaries 16 - - 2,136,310 2,136,310

49,088,956 48,283,568 35,877,462 35,680,927 Current assetsInventories 17 9,668,958 13,031,769 9,757,623 12,723,718 Trade and other receivables 19 9,203,129 5,170,707 23,801,162 20,945,700 Cash at bank and in hand 20 126,578 63,012 58,858 18,081

18,998,665 18,265,488 33,617,643 33,687,499 Total assets 68,087,621 66,549,056 69,495,106 69,368,425 LiabilitiesNon-current liabilitiesBorrowings 21 7,501,530 4,441,331 7,501,530 4,441,331Deferred taxation liabilities 23 1,040,023 1,732,957 1,040,023 1,732,957Deferred income 26 144,422 283,552 144,422 137,931

8,685,975 6,457,840 8,685,975 6,312,219Current liabilitiesTrade and other payables 22 6 ,610,452 7,282,881 6,509,050 7,235,014Current income tax liabilities 9 712,928 369,369 712,928 368,976Bank overdrafts and current portion of borrowings 21 16,025,500 19,012,693 16,025,500 19,012,693

23,348,880 26,664,943 23,247,478 26,616,683Total liabilities 32,034,855 33,122,783 32,933,453 32,928,902EquityShare capital 24 859,375 687,500 859,375 687,500Share premium 3,943,273 4,115,148 3,943,273 4,115,148Retained earnings 31,330,132 28,691,018 32,759,005 31,636,875Equity attributable to equity holders of the Company 36,132,780 33,493,666 37,561,653 36,439,523Non controlling interests (80,013) (67,393) - -Total equity 36,052,766 33,426,273 37,561,653 36,439,523Net equity and liabilities 68,087,621 66,549,056 69,495,106 69,368,425

The financial statements on pages 39 to 42 were approved and authorised for issue by the board of directors on 19 March, 2015 and were signed on its behalf by:

Larry E. Ettah Hakeem D. Ogunniran Folasade O. OgundeChairman Managing Director Financial DirectorFRC/2013/IODN/00000002692 FRC/2013/ICSAN/00000001723 FRC/2013/ICAN/0000000747

The summary of significant accounting policies and notes on pages 44 to 107 are an integral part of these financial statements.

Consolidated statements of financial positionas at 31 December 2014


GroupAttributable to owners of the Company

Share Capital Share Premium

Retained Earnings

Total Non Controlling

interests

Total

N'000 N'000 N'000 N'000 N'000 N'000Balance at 1 January 2013 687,500 4,115,148 26,459,730 31,262,378 (15,875) 31,246,503 Profit and loss - - 3,193,788 3,193,788 (51,518) 3,142,270 Dividend paid - - (962,500) (962,500) - (962,500) Balance at 31 December 2013 687,500 4,115,148 28,691,018 33,493,666 (67,393) 33,426,273

Balance at 1 January 2014 687,500 4,115,148 28,691,018 33,493,666 (67,393) 33,426,273 Profit and loss - - 3,601,697 3,601,697 (12,620) 3,589,077 Issue of bonus shares 171,875 (171,875) - - - - Dividends/transfers (962,583) (962,583) - (962,583) Balance at 31 December 2014 859,375 3,943,273 31,330,132 36,132,780 (80,013) 36,052,767

CompanyAttributable to owners of the Company

Share Capital Share Premium

Retained Earnings

Total

N'000 N'000 N'000 N'000

Balance at 1 January 2013 687,500 4,115,148 28,772,415 33,575,063 Profit and loss - - 3,826,960 3,826,960 Dividend paid - - (962,500) (962,500) Balance at 31 December 2013 687,500 4,115,148 31,636,875 36,439,523

Balance at 1 January 2014 687,500 4,115,148 31,636,875 36,439,523 Profit and loss - - 2,084,713 2,084,713 Issue of bonus shares 171,875 (171,875) - - Dividends/Transfers - - (962,583) (962,583) Balance at 31 December 2014 859,375 3,943,273 32,759,005 37,561,653

The results shown above for the period 2014 and 2013 relate to continuing operations. The summary of significant accounting policies and notes on pages 44 to 107 are an integral part of these financial statements.

Consolidated statements of changes in equityfor the year ended 31 December 2014


Group Company

2014 2013 2014 2013

N'000 N'000 N'000 N'000

Cash flow from operating activities (note 25) 535,347 3,964,957 216,493 3,805,004 Tax paid (300,431) (927,181) (300,431) (927,181) Net cash inflow from operating activities 234,916 3,037,776 (83,938) 2,877,823 Cash flow from investing activities Proceeds from sale of investment properties 1,200,000 22,492,657 1,200,000 22,492,657 Purchase of property, plant & equipment (315,480) (262,565) (58,432) (103,800) Purchase of intangible assets (61,307) - (22,291) - Proceeds from sale of property, plant and equipment 1,387 - 1,388 - Purchase of investments properties (77,367) (1,969,997) (77,367) (1,969,997) Distribution from UPDC REIT 929,740 - 929,740 - Disposal/(Purchase) of investments (joint venture projects) 939,885 (17,663,465) 939,885 (17,663,465) Interest received 721,787 637,798 721,787 637,798 Net cash flow from investing activities 3,338,645 3,234,428 3,634,710 3,393,193 Cash flow from financing activities Proceeds from borrowings 13,853,000 - 13,853,000 - Repayment of borrowings (13,670,000) (3,437,855) (13,670,000) (3,437,855) Dividend paid (962,583) (962,500) (962,583) (962,500) Interest paid (2,657,289) (2,014,157) (2,657,289) (2,014,157) Net cash flow from financing activities (3,436,872) (6,414,512) (3,436,872) (6,414,512) Net increase/(decrease) in cash and cash equivalents 136,689 (142,308) 113,900 (143,496) Cash and cash equivalents at the beginning of the period (1,146,819) (1,004,511) (1,191,750) (1,048,254)Cash and cash equivalents at the end of the period (Note 20) (1,010,130) (1,146,819) (1,077,850) (1,191,750)

The statement of accounting policies and notes on pages 44 to 107 form an integral part of these financial statements.

Consolidated statements of cash flowsfor the year ended 31 December 2014


Notes to the financial statements

1. General information UACN Property Development Company Plc (‘the Company’) and its subsidiaries (together ‘the Group’) is a

company incorporated in Nigeria. The group’s principal business activities are in the real estate and hospitality sectors. The address of the registered office is 1-5 Odunlami Street, Lagos.

The company is a public limited company and is listed on the Nigerian Stock Exchange.

2. Summary of significant accounting policies The principal accounting policies applied in the preparation of these financial statements are set out below. These

policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation The financial statements of UPDC have been prepared in accordance with International Financial Reporting

Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of land and buildings, available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 4.

(All amounts are in Naira thousands unless otherwise stated)

2.1.2 Changes in accounting policy and disclosures (a) New and amended standards adopted by the group

The following standards have been adopted by the group for the first time for the financial year beginning on or after 1 January 2014 and have a material impact on the company.

Amendment to IAS 32, ‘Financial instruments: Presentation’ on offsetting financial assets and financial liabilities. This amendment clarifies that the right of set-off must not be contingent on a future event. It must also be legally enforceable for all counterparties in the normal course of business, as well as in the event of default, insolvency or bankruptcy. The amendment also considers settlement mechanisms. The amendment did not have a significant effect on the group financial statements.

Amendments to IAS 36, ‘Impairment of assets’, on the recoverable amount disclosures for non financial assets. This amendment removed certain disclosures of the recoverable amount of CGUs which had been included in IAS 36 by the issue of IFRS 13.


Amendment to IAS 39, ‘Financial instruments: Recognition and measurement’ on the novation of derivatives and the continuation of hedge accounting. This amendment considers legislative changes to ‘over-the-counter’ derivatives and the establishment of central counterparties. Under IAS 39 novation of derivatives to central counterparties would result in discontinuance of hedge accounting. The amendment provides relief from discontinuing hedge accounting when novation of a hedging instrument meets specified criteria. The group has applied the amendment and there has been no significant impact on the group financial statements as a result.

2.1.2 Changes in accounting policy and disclosures (continued) IFRIC 21, ‘Levies’, sets out the accounting for an obligation to pay a levy if that liability is within the scope of IAS

37 ‘Provisions’. The interpretation addresses what the obligating event is that gives rise to pay a levy and when a liability should be recognised. The group is not currently subjected to significant levies so the impact on the group is not material.

Other standards, amendments and interpretations which are effective for the financial year beginning on 1 January 2014 are not material to the group.

( b) New standards, amendments and interpretations not yet adopted

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2014, and have not been applied in preparing these consolidated financial statement. None of these is expected to have a significant effect on the consolidated financial statements of the Group, except the following set out below:

IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through OCI and fair value through P&L. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in OCI not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under IAS 39. The standard is effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted. The group is yet to assess IFRS 9’s full impact.

IFRS 15, ‘Revenue from contracts with customers’ deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’ and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2017 and earlier application is permitted. The group is assessing the impact of IFRS 15.


There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the company.

2.2 Consolidation (a) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to,variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

The group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss.

Any contingent consideration to be transferred by the group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that are deemed to be assets or liabilities are recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the income statement.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. When necessary amounts reported by subsidiaries have been adjusted to conform with the group’s accounting policies.

( b) Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.


(c) Disposal of subsidiaries

When the group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

(d) Associates and joint ventures

Associates are all entities over which the group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition. The group’s investment in associates includes goodwill identified on acquisition.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.

The group’s share of post-acquisition profit or loss is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

The group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount adjacent to ‘share of profit/ (loss) of an associate’ in the income statement.

Profits and losses resulting from upstream and downstream transactions between the group and its associate are recognised in the group’s financial statements only to the extent of unrelated investor’s interests in the associates. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the group.

Dilution gains and losses arising in investments in associates are recognised in the income statement.

(e) Joint arrangements

The group has applied IFRS 11 to all joint arrangements as of 1 January 2012. Under IFRS 11 investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. IFRS GAAP plc has assessed the nature of its joint arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method. Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise the group’s share of the post-acquisition profits or losses and movements in other comprehensive income. When the group’s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the group’s net investment in the joint ventures), the group does


not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.

Unrealised gains on transactions between the group and its joint ventures are eliminated to the extent of the group’s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies adopted by the group.

2.3 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating

decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Executive Committee that makes strategic decisions.

2.4 Foreign currency translation (a) Functional and presentation currency

Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Naira (N), which is the group’s presentation currency.

( b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuations where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in profit or loss within ‘finance income or cost’.

Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income.

Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as equities classified as available for sale, are included in other comprehensive income.

(c) Group companies

The results and financial position of all the group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(a) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;


(b) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate(s) on the dates of the transactions); and

(c) all resulting exchange differences are recognised in other comprehensive income.

2.5 Property, plant and equipment Property, plant and equipment are recorded at cost less accumulated depreciation and impairment.

Land and buildings comprise mainly of retail outlets and offices as well as hotel rooms.

Land and buildings held for use in the production or supply of goods or services, or for administration purposes, are stated cost less accumulated depreciation and any accumulated impairment losses. All other assets are stated at historical cost less accumulated depreciation and accumulated impairment losses.

Land is not depreciated. Leasehold properties are depreciated over their useful lives, unless the lease period is shorter, in which case the lease period is used. Depreciation on other assets is calculated using the straight line method to allocate their cost or revalued amounts to their residual values over their estimated useful lives, as follows:

Property, plant and equipment are depreciated on a straight line basis over the current useful lives of the assets. The estimated useful lives of the assets are:

Leasehold buildings Lease terms vary from 5 to 99 years

Heavy industrial plant 5 to 10 yearsFurniture and office Equipment 3 to 5 yearsLight industrial plant 2 to 5 yearsHeavy vehicles 7 to 10 yearsLight vehicles 4 to 6 yearsComputer equipment 3 to 5 years

The useful lives and residual values are reassesed at the end of each reporting period and adjusted if necessary.

The depreciation on property, plant and equipment is recognised in profit or loss in the year in which it occurred.

The gain or loss on property, plant and equipment is determined by subtracting the carrying value from the net disposal proceeds on date of sale. The gain or loss on sale of property, plant and equipment is recognised in the statement of comprehensive income and is not classified as revenue.

Subsequent expenditure relating to an item of equipment is capitalised when it is probable that future economic benefits will flow to the entity and the cost can be measured reliably. All other subsequent expenditures are recognised as an expense in the period in which it incurred.


2.6 Intangible assets (a) Goodwill

Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration transferred over the company’s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs, or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.

( b) Computer software

Costs associated with maintaining computer software programs are recognised as expenses incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the group are recogniesd as intangible assets when the following criteria are met:

• it is technically feasible to complete the software product so that it will be available for use;

• management intends to complete the software product and use or sell it;

• there is an ability to use or sell the software product;

• it can be demonstrated how the software product will generate probable future economic benefits;

• adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and

• the expenditure attributable to the software product during its development can be reliably measured.

Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads.

Other development expenditures that do not meet these criteria are recognised as expenses incurred. Development costs previously recognised as expenses are not recognised as assets in a subsequent period.

Computer software development costs recognised as assets are amortised over their estimated useful lives, which does not exceed five years.

2.7 Investment properties Properties that are held for long-term rental yields or for capital appreciation or both, and that are not occupied

by the entities in the consolidated group, are classified as investment properties. Investment properties comprise mainly of commercial projects constructed and acquired with the aim of leasing out to tenants.

Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs.


After initial recognition, investment property is carried at fair value. Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If this information is not available, the Group uses alternative valuation methods, such as recent prices on less active markets or discounted cash flow projections. Valuations are performed as of the financial position date by professional valuers who hold recognised and relevant professional qualifications and have recent experience in the location and category of the investment property being valued. These valuations form the basis for the carrying amounts in the financial statements. Investment property that is being redeveloped for continuing use as investment property or for which the market has become less active continues to be measured at fair value.

The group makes use of internal and external valuation experts. Each property is valued by an external valuater at least every three years.

The fair value of investment property reflects, among other things, rental income from current leases and assumptions about rental income from future leases in the light of current market conditions.

The fair value also reflects, on a similar basis, any cash outflows that could be expected in respect of the property. Some of those outflows are recognised as a liability, including finance lease liabilities in respect of leasehold land classified as investment property; others, including contingent rent payments, are not recognised in the financial statements.

Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognised.

The fair value of investment property does not reflect future capital expenditure that will improve or enhance the property and does not reflect the related future benefits from this future expenditure other than those a rational market participant would take into account when determining the value of the property.

Changes in fair values are recognised in profit or loss. Investment properties are derecognised when they have been disposed.

If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment. Its fair value at the date of reclassification becomes its cost for subsequent accounting purposes.

If an item of owner-occupied property becomes an investment property because its use has changed, any difference resulting between the carrying amount and the fair value of this item at the date of transfer is treated in the same way as a revaluation under IAS 16. Any resulting increase in the carrying amount of the property is recognised in profit or loss to the extent that it reverses a previous impairment loss, with any remaining increase recognised in other comprehensive income and increase directly to equity in revaluation surplus within equity. Any resulting decrease in the carrying amount of the property is initially charged in other comprehensive income against any previously recognised revaluation surplus, with any remaining decrease charged to profit or loss.

Where an investment property undergoes a change in use, evidenced by commencement of development with a view to sale, the property is transferred to inventories. A property’s deemed cost for subsequent accounting as inventories is its fair value at the date of change in use.

Leasehold investment properties represent properties acquired under government consent for 99 years.


2.8 Impairment of non-financial assets The carrying value of assets is reviewed for impairment at each reporting date. Assets are impaired when events or

changes in circumstances indicate that their carrying values may not be recoverable. If such indication exists and where carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount. Recoverable amounts are determined as the higher of fair value less costs to sell or value in use. Impairment losses and the reversal of impairment losses are recognised in the statement of comprehensive income. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss has been recognised.

2.9 Non-current assets (or disposal groups) held for sale Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be

recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell.

2.10 Financial assets

2.10.1 Classification The group classifies its financial assets in the following categories: loans and receivables, and available for sale. The

classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

(a) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The group’s loans and receivables comprise ‘trade and other receivables’ and ‘cash and cash equivalents’ in the balance sheet (notes 2.14 and 2.15).

( b) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period. These include investments in shares.

(c) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months, otherwise they are classified as non-current.

2.10.2 Recognition and measurement Regular purchases and sales of financial assets are recognised on the trade date – the date on which the group

commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method.


Changes in the fair value of monetary and non-monetary securities classified as “available-for-sale” are recognised in other comprehensive income.

When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in profit or loss as ‘gains and losses from investment securities’.

Interest on available-for-sale securities calculated using the effective interest method is recognised in the income statement as part of other income. Dividends on available-for-sale equity instruments are recognised in the income statement as part of other income when the group’s right to receive payments is established.

2.11 Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally

enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

2.12 Impairment of financial assets (a) Assets carried at amortised cost

The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

The criteria that the group uses to determine that there is objective evidence of an impairment loss include:

Evidence of impairment may include indications that the debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If an asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss.

( b) Assets classified as available for sale

The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. For debt securities, the group uses the criteria referred to in (a) above. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-for-


sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss is removed from equity and recognised in profit or loss. Impairment losses recognised in profit or loss on equity instruments are not reversed through profit or loss. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through profit or loss.

2.13 Inventories Inventories are stated at the lower of cost and estimated net realisable value. Cost is based on standard costing that

comprises direct materials and where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

2.14 Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the

effective interest rate method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of the receivables. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.

2.15 Cash, cash equivalents and bank overdrafts Cash, cash equivalents and bank overdrafts includes cash at bank and in hand plus short-term deposits less

overdrafts. Short-term deposits have a maturity of less than three months from the date of acquisition. Bank overdrafts are repayable on demand and form an integral part of the Group’s cash management.

2.16 Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently

carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

2.17 Trade payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of

business from suppliers. Accounts payables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.


2.18 Borrowing costs General and specific borrowing costs directly attributable to the acquisition, construction or production of

qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

2.19 Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past

event, and it is probable that the Group will be required to settle that obligation and the amount has been reliably estimated.

Provisions for restructuring costs are recognised when the Group has a detailed formal plan for the restructuring that has been communicated to affected parties. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

2.20 Share capital Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Where any group company purchases the company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the company’s equity holders until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the company’s equity holders.

2.21 Current and deferred income tax The tax for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent

that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is recognised in other comprehensive income or directly in equity, respectively.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date.


Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax liabilities on a net basis.

2.22 Employee benefits

Pension schemes Group companies operate various pension schemes. The schemes are generally funded through payments to

insurance companies or trustee-administered funds, determined by periodic actuarial calculations. A defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. The group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

(a) Gratuity scheme

The group operates a gratuity scheme. Under this scheme all full time employees are entitled to a defined percentage of their final salary based on the number of years they worked for group to be paid upon retirement. To be eligible for the scheme the employee must have worked for the group for a minimum of 3 years. This scheme meets the definition of a defined benefit plan.

During the beginning of the period ended 31 December 2012 the scheme was modified. As a result of the modification the group will contribute on a annual basis a fixed percentage of the employees salary to a fund. The funds will be invested on behalf of the employees and they will receive a payout based on the return of the fund upon retirement. Based on the modifications of this scheme it is treated as a defined contribution scheme from 1 January 2012.

( b) Defined Contribution scheme

The Pensions Reform Act of 2004 requires all companies to pay a minimum of 7.5% of basic salary (including housing and transport allowances) to a pension fund on behalf of all full time employees. This is classified as a defined contribution plan.


The contributions are recognised as employee benefit expenses when they are due. The group has no further payment obligation once the contributions have been paid. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payment is available.

(c) Profit-sharing and bonus plans

The group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit attributable to the company’s shareholders after certain adjustments. The group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

2.23 Revenue recognition Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable

for goods and services provided in the normal course of business, net of discounts, rebates and sales related taxes but including interest receivable on sales on extended credit and income from the provision of technical services and agreements. Revenue is recognised when the amount of revenue can be reliably measured and it is probable that future economic benefits will flow to the entity.

Sales of goods are recognised when significant risks and rewards of ownership have been transferred to buyers.

Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.

Interests are recognised using the effective interest method as set out in IAS 39.

(a) Sale of real estate

The group assesses whether the buyer is able to specify the major structural elements of the design of the real estate before construction begins and/or specify major structural changes once construction is in progress for each of its contracts to assess whether to treat these as the sale of goods or construction contracts.

At this stage all contracts are treated as sale of goods.

Revenue is recognised when significant risks and rewards of ownership have passed to the buyer. The granting of the legal title is an administrative matter that can have significant delays.

( b) Rental income

Revenue includes rental income, service charges and management fee charges on properties.

Rental income from operating leases is recognised on a straight-line basis over the lease term. When the group provides incentives to its tenants, the cost of incentives is recognised over the lease term, on a straight-line basis, as a reduction of rental income.

Service and management fee charges are recognised in the accounting period in which the services are rendered. When the group is acting as an agent, the commission rather than gross income is recorded as revenue.


2.24 Leases

(a) The group company is a lessee (i) Operating lease

Leases in which a significant portion of the risks and rewards of ownership are retained by another party, the lessor, are classified as operating leases. Payments, including prepayments, made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

(ii) Finance lease

“Leases of assets where the group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are recognised at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in current and noncurrent borrowings. The interest element of the finance cost is treated as borrowing costs (see Note 2.18) and expensed/capitalised over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Investment properties recognised under finance leases are carried at their fair value.

(b) The group company is a lessor (i) Operating lease

Refer to revenue recognition policy.

2.25 Dividend distribution Dividend distribution to the company’s shareholders is recognised as a liability in the group’s financial statements

in the period in which the dividends are approved by the company’s shareholders. In respect of interim dividends these are recognised once paid.


BIRTHDAY CELEBRATIONS


3. Financial risk management

3.1 Financial risk factors The group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value

interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the group’s financial performance.

The group is currently developing a centralised risk management function. At present specific risk management functions are carried out by the specific business units.

(a) Market risk (i) Foreign exchange risk

The group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar as a result of the hotel operations. Foreign exchange risk arises from future commercial transactions. There are no exposures to recognised assets and liabilities as we do not have investments in foreign operations.

The group does not make use of derivatives to hedge its exposures.

Letters of credit are issued by the business units to the foreign suppliers for the purchase of materials.

The groups concentration of foreign exchange risk is as follows:

GROUP 2014

Naira USD GBP Other Total

N’000 N’000 N’000 N’000 N’000

Financial assetsTrade and other receivables 9,203,129 - - - 9,203,129 Cash and cash equivalent 72,910 52,272 - 1,396 126,578

9,276,039 52,272 - 1,396 9,329,707 Financial liabilitiesLong term loans 7,501,530 - - - 7,501,530 Current portion of borrowing 14,888,793 - - - 14,888,793 Trade and other payables 6,610,452 - - - 6,610,452 Bank overdrafts 1,136,708 - - - 1,136,708

30,137,483 - - - 30,137,483


GROUP 2013


N’000 N’000 N’000 N’000 N’000


5,227,921 3,528 - 2,270 5,233,719 Financial liabilitiesLong term loans 4,441,331 - - - 4,441,331 Current portion of borrowings 17,802,861 - - - 17,802,861 Trade and other payables 7,282,881 - - - 7,282,881 Bank overdrafts 1,209,831 - - - 1,209,831

30,736,904 - - - 30,736,904

COMPANY 2014


N’000 N’000 N’000 N’000 N’000


23,806,352 52,272 - 1,396 23,860,020 Financial liabilitiesLong term loans 7,501,530 - - - 7,501,530 Current portion of borrowings 14,888,793 - - - 14,888,793 Trade and other payables 6,509,050 - - - 6,509,050 Bank overdrafts 1,136,708 - - - 1,136,708

30,036,081 - - - 30,036,081


COMPANY 2013


N’000 N’000 N’000 N’000 N’000


20,957,983 3,528 - 2,270 20,963,781 Financial liabilitiesLong term loans 4,441,331 - - - 4,441,331 Current portion of borrowings 17,802,861 - - - 17,802,861 Trade and other payables 7,235,014 7,235,014 Bank overdrafts 1,209,831 1,209,831

30,689,037 - - - 30,689,037

Group Company

2014 2013 2014 2013

N’000 N’000 N’000 N’000

The total impact on profit and equity if Naira were to decrease by 1% across currencies would be as follows 64 58 64 58

Management considers a 1% shift in foreign currency exchange rate is appropriate to determine the sensitivity of Foreign currency denominated financial assets and liabilities vis a vis the Naira.

(ii) Price risk

Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices of equity (other than those arising from interest rate risk or currency risk).

The group is not exposed to equity price risk as it does not have any investment in equity securities.

(iii) Cash flow and fair value interest rate risk

The group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the group to cash flow interest rate risk which is partially offset by cash held at variable rates. Borrowings issued at fixed rates expose the group to fair value interest rate risk. The individual boards of each business unit within the group set their own borrowing limits. No formal group limit policy exists at this stage.

The Treasury department monitors interest rate exposures and sensitivities for the entire group on a monthly basis. This is analysed and reviewed by the board on a quarterly basis.


The Group’s interest rate risk concentration is as follows:

2014

Weighted average

Interest rate

“Interest bearing Balance (Naira)”

Non-interest bearing

GROUP Variable rate Fixed rate

Financial assetsTrade and other receivables - - 9,203,129 Cash and cash equivalent - - 126,578

- - 9,329,707 Financial liabilitiesLong term loans 14.80 18,988,853 3,401,468 - Trade and other payables - - 6,610,452 Bank overdrafts 16.50 1,136,708 - -

20,125,561 3,401,468 6,610,452

2013

Weighted average

Interest rate



GROUP Variable rate Fixed rate


- - 5,233,719

2013

Weighted average

Interest rate



Financial liabilities Variable rate Fixed rate

Long term loans 13.10 13,910,859 8,333,333 Trade and other payables - - 7,282,881 Bank overdrafts 16.00 1,209,831 - -

15,120,690 8,333,333 7,282,881


2014

Weighted average

Interest rate



COMPANY Variable rate Fixed rate


- - 23,860,020 Financial liabilitiesLong term loans 14.80 18,988,854 3,401,468 Trade and other payables - - 6,509,050 Bank overdrafts 16.50 1,136,708

20,125,562 3,401,468 6,509,050

2013

Weighted average

Interest rate



COMPANY Variable rate Fixed rate


- - 20,963,781 Financial liabilitiesLong term loans 13.10 13,910,859 8,333,333 - Trade and other payables - - 7,235,014 Bank overdrafts 16.00 1,209,831 - -

15,120,690 8,333,333 7,235,014

Group

2014 2013

A 3% increase in interest rates would have the following impact on profit and equity. (603,767) (453,621)

Management considers that a 2% shift in interest rate is reasonable as the interest rate has fluctuated by a maximum of 2% in 2014.


( b) Credit risk

Credit risk is monitored by the company and on behalf of the hotel as well. Each local entity is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered.

Credit risk arises from cash and cash equivalents, accounts receivable and deposits with banks and financial institutions.

For banks and financial institutions, the group ustilises institutions that have sufficient reputational risk but do not strictly monitor their formal ratings. In addition the group monitors its exposures with individual institutions and has internal limits to control maximum exposures. The group does not maintain a minimum threshold for its investments based on credit rating. When considering investments the group compares the risk exposure to the returns provided by the institution.

Credit terms are set with customers based on past experiences, payment history and reputations of the customers. Credit terms for real estate are medium term, typically 60 days, for the hotel these range from 0 - 30 days.Rental businesses collect amounts in advance to limit exposures.

Concentration of credit risk2014

GROUP Total gross amount

Fully performing

Past due but not impaired

Impaired

Trade receivables 2,403,087 418,161 1,789,282 195,644 Receivable from group company 5,427,749 5,427,749 - - Other receivables 316,928 316,928 - - Advances to staff 10,818 10,818 - - Cash and bank balances 126,578 126,578 - -

8,237,023 6,252,097 1,789,282 195,644

2013

GROUP Total gross amount

Fully performing


Impaired

Trade receivables 1,379,242 583,752 632,344 173,580 Receivable from group company 3,358,325 3,358,325 - - Other receivables 545,077 545,077 - - Advances to staff 3,663 3,663 - - Cash and bank balances 63,012 63,012 - -

5,351,975 4,556,485 632,344 173,580


2014

COMPANY Total gross amount

Fully performing


Impaired

Trade receivables 2,293,106 210,564 1,886,898 195,644 Intergroup balances 20,180,329 20,180,329 - - Other receivables 268,791 268,791 - - Advances to staff 10,745 10,745 - - Cash and bank balances 58,858 58,858 - -

22,811,829 20,729,287 1,886,898 195,644

2013

COMPANY Total gross amount

Fully performing


Impaired

Trade receivables 1,171,645 365,720 632,344 173,580 Intergroup balances 19,337,465 19,337,465 - - Other receivables 545,077 545,077 - - Advances to staff 7,113 7,113 - - Cash and bank balances 18,081 18,081 - -

21,079,381 20,273,456 632,344 173,580

Details of the credit quality of performing assets are as follows:

Counterparties without external credit ratings

GROUP COMPANY

2014 2013 2014 2013

Trade receivablesGroup 1 418,161 394,017 210,564 186,420 Group 2 - 104,228 - 104,228 Group 3 - 75,072 - 75,072

418,161 573,317 210,564 365,720 Intergroup balancesGroup 1 5,427,749 3,358,325 20,180,329 19,337,465

5,427,749 3,358,325 20,180,329 19,337,465


The group defines the ratings as follows:

Group 1 - These are balances with Blue Chip, Listed and other large entities with a low chance of default.

Group 2 - These are balances with small - medium sized entities with no history of defaults

Group 3 - These are balances with small - medium sized entities with a history of defaults or late payments.

Counterparties with external credit ratings GROUP COMPANY

2014 2013 2014 2013

Cash and bank balancesAAA 126,578 63,012 58,858 18,081

126,578 63,012 58,858 18,081

Details of the past due but not impaired assets are as follows:GROUP COMPANY

2014 2013 2014 2013

Trade receivablesPast due 30-60 days 536,785 189,703 536,785 1,496,638 Past due 60-90 days 1,252,497 442,641 1,252,497 -

1,789,282 632,344 1,789,282 1,496,638

Details of the impaired assets are as follows:GROUP COMPANY

2014 2013 2014 2013

Trade receivablesPast due 0-90 days 9,232 9,232 9,232 9,232 Past due 90-180 days 34,090 34,090 34,090 34,090 Past due > 180 days 152,322 130,258 152,322 130,258

195,644 173,580 195,644 173,580

GROUP COMPANY

Receivables 2014 2013 2014 2013

At 1 January 173,580 187,441 173,580 187,441 Provision for receivables impairment 22,064 (13,861) 22,064 (13,861)At 31 December 195,644 173,580 195,644 173,580


(c) Liquidity risk

Cash flow forecasting is performed in the operating entities of the group and aggregated by group finance. Group finance monitors rolling forecasts of the group’s liquidity requirements to ensure it has sufficient cash to meet operational needs. The group also ensures that at all times borrowing limits or covenants (where applicable) on any of its borrowing facilities are not breached.

The table below analyses the group’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

GROUP

At 31 December 2014 Less than 3 months

Between 3 months and 1

year

Between 1 and 5 years

Over 5 years

Borrowings - 14,888,793 7,501,530 - Trade and other payables 1,892,990 4,717,462 - - Bank overdrafts - 1,136,708 -

1,892,990 20,742,964 7,501,530 -

GROUP



year


Over 5 years

Borrowings - 17,802,861 4,441,331 - Trade and other payables 441,773 6,841,108 - - Bank overdrafts - 1,209,831 -

441,773 25,853,800 4,441,331 -

COMPANY



year


Over 5 years

Borrowings (excluding finance lease liabilities) - 14,888,793 7,501,530 - Trade and other payables 1,892,990 4,616,060 - - Bank overdrafts - 1,136,708 - -

1,892,990 20,641,562 7,501,530 -


COMPANY



year


Over 5 years

Borrowings (excluding finance lease liabilities) - 17,802,861 4,441,331 - Trade and other payables 441,773 6,793,241 - - Bank overdrafts - 1,209,831 - -

441,773 25,805,933 4,441,331 -

3.2 Capital risk management The group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern

in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The group monitors capital on the basis of the gearing ratio. This ratio is calculated as interest bearing debt divided by total equity. Interest bearing debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the consolidated statement of financial position). Total equity is calculated as ‘equity’ as shown in the consolidated statement of financial posistion including non controlling interest.

No formal debt equity target has been established.

2014 2013

Interest bearing debt 23,527,030 23,454,023 Total equity 36,052,766 33,426,273 Total capital 59,579,796 56,880,296 Gearing ratio 0.65 0.70


3.3 Fair value estimation The following table represents the groups’ financial assets and liabilities that are not measured at fair value

Group

2014 2013

Carrying Value Fair Value Carrying Value Fair Value

AssetsTrade receivables 2,207,443 2,207,443 1,205,662 1,205,662 Other receivables 5,696,540 5,696,540 3,903,402 3,903,402 Cash & short term deposits - - 63,012 63,012 LiabilitiesBorrowings 7,464,660 7,501,530 4,549,328 4,441,331 Bank overdrafts and current portion of borrowings 16,025,500 16,025,500 19,012,692 19,012,692 Trade payables 3,733,941 3,733,941 4,746,019 4,746,019

Company

2014 2013

Carrying Value Fair Value Carrying Value Fair Value

AssetsTrade receivables 2,097,462 2,097,462 998,065 998,065 Other receivables 20,449,120 20,449,120 19,882,542 19,882,542 Cash & short term deposits 58,858 58,858 18,081 18,081 LiabilitiesBorrowings 7,464,660 7,501,530 7,501,530 4,441,331 Bank overdrafts and current portion of borrowings 15,988,630 15,988,630 19,120,689 19,120,689 Trade payables 3,633,763 3,633,763 4,672,094 4,672,094


3.4 Financial instruments by category

Group

2014

Fair value through profit

or loss

Available for sale

Loans and receivables

Other financial

liabilities

Financial assetsTrade and other receivables - - 2,403,087 - Cash and short-term deposits - - 126,578 - Financial liabilitiesLong term borrowings - - - 7,501,530 Current portion of long term borrowings - - - 14,888,793 Trade and other payables - - - 6,610,452 Bank overdrafts - - - 1,136,708

Group

2013


or loss

Available for sale


Other financial

liabilities



Company

2014


or loss

Available for sale


Other financial

liabilities


Company

2013


or loss

Available for sale


Other financial

liabilities



GROUNDBREAKING AT GOLF ESTATE, CALABAR

PINEVILLE ESTATE, ASABA PRODUCT LAUNCH


CORPORATE SOCIAL RESPONSIBILITY - WALK FOR NATURE

CONSTRUCTION OF DRAINAGE ON CAMERON ROAD, IKOYI


GROUNDBREAKING AT OLIVE COURT, IBADAN

SIGNING OF MEMORANDUM OF UNDERSTANDING WITH OYO STATE GOVERNMENT


UNVEILING OF PROJECTS PLAN FOR 2015

CAMERON GREEN COMMISSIONING


4. Significant judgements and estimates

4.1 Significant estimates The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by

definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

a) Investment properties

The Group uses external experts in valuing its investment properties. For an analysis of the properties valued using each of these refer to Note 14.

For external valuations professional valuers make use of the following key assumptions:

1. That the interests held by the company as evidenced by title deeds are good and marketable;

2. That the properties are free from onerous restrictions and charges;

3. That the properties are not adversely affected by or subject to compulsory acquisition, road widening, planning restrictions or urban renewal schemes;

4. That the properties are free from structural, infestation or concealed defect conditions of properties and no sign of impairment.

Group Company

N’000 N’000 N’000 N’000

Freehold building 673,984 655,852 673,984 655,852 Leasehold building 15,868,125 14,673,041 15,868,125 14,673,041 Total investment properties 16,542,109 15,328,893 16,542,109 15,328,893

4.2 Significant judgements a) Revenue recognition

Sale of constructed properties requires detailed judgement. Each transaction is assessed to determine under IFRIC 15 whether revenue should be recognised when the significant risks and rewards pass to the buyer or over time as construction takes place. All of the projects in the periods presented were identified as being the sale of goods and therefore revenue was only recognised when the significant risks and rewards had passed.

The significant risks and rewards were identified as having passed when the buyer had been issued a Letter of Reservation and has access to the properies. Transfer of legal title in the market is time consuming and is seen only as an administrative step and not as a pre-requisite for revenue recognition.

b) Investment in associate

In June 2013 , the company floated a Real Estate Investment Trust (REIT) of 3,000,000,000 units of N10 each.

The company’s planned subscription of the REIT was 40% to UPDC and 60% to the general public. The REIT closed at a value of N26.7billion, (2,668,269,500 units) with UPDC holding 62.4% while other investors held 37.6%. It was listed on the Nigerian Stock Exchange (NSE) on July 1, 2013.


The REIT is a property fund backed up by five investment properties comprising residential apartments in the luxury category, commercial office bolcks, a warehouse and shops.

The REIT is governed by a Trust Deed, administered by UBA Trustees Limited and First Trustees Limited. The documents of title to the properties are held by the Custodians, UBA Global Services Limited. The Fund is managed by FSDH Asset Management Limited (FSDH AM) while UPDC is the Property Manager.

Although the company has more than 50% investment in the REIT, it was not consolidated as a subsidiary because the company does not control the REIT. Control is exercised by a 9-member Investment committee comprising the following:

UBA Trustees (Joint Trustees) 1 slotFirst Trustees (Joint Trustees) 1 slotIndependent committee members 3 slotsFSDH Asset Management Limited (Fund Managers) 2 slotsUPDC (Sponsor of REIT & Property Manager) 2 slots


5. Segmental analysis The chief operating decision-maker has been identified as the Executive Management Committee (Exco). The

Exco reviews the company’s internal reporting in order to assess performance and allocate resources. Management has identified the following as operating and geographical segments:

Property development, sales & management - UACN Property Development Plc’s (UPDC) main business is the acquisition, development, sales and management of high quality serviced commercial and residential properties in the luxury, premium and classic segments of the real estate market in Nigeria. The company approaches property planning from the customers’ perspective to create comfortable living and working environments.

Hospitality services - UPDC Hotels Limited the company’s subsidiary is in the hospitality industry and leverages significantly on the success of its principal promoter UACN Property Development Company Plc. The hotel provides services such as sale of rooms, conferencing and banquet facilities as well as food and beverage services.

The following measures are reviewed by the Exco:

• Revenue to third parties

• Earnings before interest and tax

• Profit before tax

• Net current assets

• Property, plant and equipment

Property development

sales & management

Hospitality services

Total

31 December 2014 N’000 N’000 N’000

Total revenue 10,081,316 1,619,190 11,700,506 Intergroup revenue (other UAC group entities) (132,012) (15,164) (147,176) Revenue to third parties 9,949,304 1,604,026 11,553,330 Earnings /(loss) before interest and tax 3,971,663 (1,474,596) 2,497,068 Profit /(loss) before tax 2,036,161 1,504,364 3,540,525 Net current assets/ (liabilities) 10,370,165 (14,720,380) (4,350,215) Property, plant and equipment 126,881 13,289,038 13,415,919


Property development

sales & management

Hospitality services

Total

31 December 2013 N’000 N’000 N’000

Total Revenue 9,328,425 1,970,473 11,298,899 Intergroup revenue (other UAC group entities) (152,788) (35,164) (187,952) Revenue to third parties 9,175,637 1,935,309 11,486,851 Earnings /(loss) before interest and tax 5,755,431 (671,792) 5,083,639 Profit /(loss)before tax 4,379,325 (671,539) 3,707,533 Net current assets/ (liabilities) 7,070,816 (15,470,271) (8,399,455)Property, plant and equipment 224,481 14,738,952 14,963,433

Entity wide information

2014 2013

Analysis of revenue by category: N’000 N’000

Sale of property stock 9,023,651 7,864,857 Rental income 558,318 1,107,872 Rest house revenue - 7,333 Project management fees 499,347 348,363 UACN Property Development Company Plc 10,081,316 9,328,425 UPDC Hotels Limited 1,619,190 1,970,474 Group 11,700,506 11,298,899

2014 2013

Analysis of revenue by geographical location: N’000 N’000

Nigeria 11,700,506 11,298,899


6. Other operating income Group Company

2014 2013 2014 2013

N’000 N’000 N’000 N’000

Investment income - 2,250 - 2,250 Income distribution from REIT - - 929,740 - Income from legal services 149,408 70,384 149,408 70,384 Service charge received 15,900 7,932 15,900 7,932 Sales commission received 24,619 12,105 24,619 12,105 Sundry income 35,698 4,775 35,698 29,346

225,625 97,446 1,155,365 122,017


7. Expenses by nature Group Company

2014 2013 2014 2013

N’000 N’000 N’000 N’000

Change in inventories of finished goods and work in progress 9,383,130 7,564,494 7,998,899 5,914,541 Direct operating expenses for investment properties 110,814 259,472 110,814 304,868 Personnel expenses 833,907 687,467 489,190 550,534 Depreciation and amortization 229,138 694,157 118,818 60,840 Rents and Rates 29,370 10,995 21,238 20,009 Electricity & Power 1,968 2,564 1,968 2,564 Vehicles repairs, maintenance & fueling 41,603 30,464 36,581 30,464 Other repairs & maintenance 115,955 114,778 2,858 1,738 Legal expenses 16,346 10,265 16,346 10,265 Auditors’ remuneration 28,948 28,500 22,000 22,000 Directors’ emoluments 85,567 94,720 85,567 83,720 Loss on sale of property, plant and equipment 34,921 41,304 34,921 41,304 Information technology 82,631 35,011 64,717 15,011 Insurance 16,012 11,810 4,325 6,858 Marketing, communication & entertainment 219,240 127,428 57,265 42,428 Professional fees 115,036 130,712 115,036 115,735 Printing and stationery 11,925 9,739 11,925 9,739 UACN management fee 100,813 89,717 100,813 93,284

11,457,326 9,943,597 9,293,281 7,325,902 Cost of sales 9,870,826 8,099,530 8,434,341 6,309,127 Selling and distribution expenses 219,240 127,428 57,265 82,428 Admininstrative expenses 1,367,260 1,716,639 801,675 934,347

11,457,326 9,943,597 9,293,281 7,325,902


Group Company

2014 2013 2014 2013

Personnel expenses include: N’000 N’000 N’000 N’000

Wages and salaries 639,840 618,739 435,083 504,850Pension costs:Pension benefits 41,199 32,350 22,420 18,709Gratuity scheme (a) - defined contribution 152,868 36,379 31,687 26,975

833,908 687,468 489,190 550,534

Particulars of directors and staff(i) The group had in its employment during the year the weekly average number of staff in each category below. The aggregate amount stated against each category was incurred as wages and retirement benefit costs during the year.

Group Company

2014 2013 2014 2013

Costs N’000 N’000 N’000 N’000

Management 698,207 466,300 422,524 436,616 Staff 221,268 221,167 152,232 167,637 Total 919,475 687,467 574,756 604,253

Group Company

2014 2013 2014 2013

Numbers Number Number Number Number

Management 115 102 82 71 Staff 224 257 49 53 Total 339 359 131 124


(ii) The table below shows the number of employees (excluding directors), who earned over =100,000 as emoluments in the year and were within the bands stated.

Group Company

=N= 2014 2013 2014 2013

300,001 - 400,000 6 48 - - 400,001 - 500,000 25 24 - 1 500,001 - 600,000 23 6 1 8 600,001 - 700,000 31 41 6 8 700,001 - 800,000 64 64 8 9 800,001 - 900,000 19 34 8 11 900,001 - 1,000,000 29 18 12 41 1,000,001 - 2,000,000 72 64 41 17 2,000,001 - 3,000,000 30 21 23 15 3,000,001 - 4,000,000 18 19 15 6 4,000,001 - 5,000,000 9 8 6 4 5,000,001 - 6,000,000 5 7 4 2 6,000,001 - 7,000,000 5 2 3 - 7,000,001 - 8,000,000 1 1 1 1 8,000,001 - 9,000,000 - 1 - 1

9,000,001 - 10,000,000 1 1 1 - 337 357 129 122

Group Company

2014 2013 2014 2013

(iii) Emoluments of directors N’000 N’000 N’000 N’000

Fees 1,500 1,500 1,500 1,550 Other emoluments 84,067 72,588 84,067 71,538

85,567 74,088 85,567 73,088 (iv) The Chairman’s emolument. 300 300 300 300 (v) Emolument of the the highest paid director. 24,654 20,633 24,654 20,633 (vi) Key management personnel compensationShort term benefits 85,567 74,088 85,567 74,088 Post employment benefits 6,431 6,431 6,431 6,431

91,998 80,519 91,998 80,519 UPDC ANNUAL REPORT 84

(vii) The table below shows the number of directors of the company, whose remuneration, excluding pension contributions, fell within the bands shown.

Group Company

2014 2013 2014 2013

=N= Number Number Number Number

1,000,001 - 8,000,000 5 5 5 58,000,001 - 14,000,000 1 1 1 114,000,001 and above 1 1 1 1

7 7 7 7

8. Net finance income/(cost)

Group Company

2014 2013 2014 2013

N’000 N’000 N’000 N’000

Interest income on accounts receivable 721,787 638,051 721,787 637,798 Finance Income 721,787 638,051 721,787 637,798 Interest payable on bank loans 2,210,580 1,773,910 2,210,580 1,773,910 Interest payable on bank overdrafts 446,709 240,247 446,709 240,247 Finance costs 2,657,289 2,014,157 2,657,289 2,014,157 Net finance cost 1,935,502 1,376,106 1,935,502 1,376,359

9. Taxation

Group Company

2014 2013 2014 2013

N’000 N’000 N’000 N’000

Current taxNigeria corporation tax charge for the year (644,383) 545,490 644,383 545,490Total current tax charge (644,383) 545,490 644,383 545,490 Deferred taxTemporary differences, origination and reversal (692,935) 6,624 (692,935) 6,624 Total deferred tax (note 23) (692,935) 6,624 (692,935) 6,624 Income tax expense (48,552) 552,114 (48,552) 552,114

Nigeria corporation tax is calculated at 30% (2013: 30%) of the estimated assessable profit for the year.


The tax charge for the year can be reconciled to the profit per the consolidated income statement as follows:

Group Company

2014 2013 2014 2013

N’000 N’000 N’000 N’000

Profit before tax 3,540,525 3,707,533 2,036,161 4,379,325 Tax at the Nigeria corporation tax rate of 30% (2011: 30%) 610,848 1,112,260 610,848 1,313,722 Education tax 3,849 74,151 3,849 87,581 Capital gains tax 382,720 6,624 382,720 6,624 Deferred tax not raised on assessed losses 14,462 72,259 14,462 72,259 Effect of dividend tax 238,160 - 238,160 - Effect of permanent differences (605,657) (713,179) (605,657) (928,073) Tax charge for the year 644,382 552,115 644,382 552,113

Group Company

Per statement of financial position 2014 2013 2014 2013

N’000 N’000 N’000 N’000

Balance as at 1 January 369,369 751,060 368,976 750,666 Charge for the year 644,382 304,427 644,382 304,427 Payments during the year (300,431) (927,182) (300,431) (927,181) Tax adjustment brought by revenue authority - 241,064 - 241,064 Balance as at 31 December 713,320 369,369 712,927 368,976

10. Dividends

Group Company

2014 2013 2014 2013

N’000 N’000 N’000 N’000

Amounts recognised as distributions to ordinary shareholders in the year comprise:A dividend of N962,500,000 representing 70 kobo per share was declared for 2013 financial year and paid in June 2014. The withholding tax thereon was remitted to the tax authorities both at the Federal and various State levels. (962,500) (962,500) (962,500) (962,500)

The proposed final dividend for the year ended 31 December 2014 will be subject to approval by shareholders at the Annual General Meeting and hence has not been included as a liability in the financial statements at 31 December 2014.


11. Earnings per share (a) Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year excluding ordinary shares purchased by the company and held as treasury shares.

Group

2014 2013

Profit attributable to ordinary equity shareholders (NGN ‘000) 3,601,697 3,193,788Basic earnings per share (Naira) 2.10 1.86 Diluted earnings per share (Naira) 2.10 1.86

Basic weighted average and diluted weighted average number of shares.

Number Number

1,718,750,000 1,718,750,000

( b) Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The group has no dilutive instruments.


12. Property plant and equipment

GroupCost Leasehold land

and buildingsMotor

VehiclesPlant and

MachineryFurniture &

FittingsComputer

EquipmentTotal

N’000 N’000 N’000 N’000 N’000 N’000

At 1 January 2013 15,307,077 271,034 948,047 1,620,718 53,897 18,200,773 Additions 28,141 100,539 104,485 24,232 5,167 262,564 Disposals - (53,096) (84,097) (24,639) (5,108) (166,940) At 31 December 2013 15,335,218 318,477 968,435 1,620,311 53,956 18,296,397

At 1 January 2014 15,335,218 318,477 968,435 1,620,311 53,956 18,296,397 Additions 99,320 31,385 174,143 5,767 4,865 315,480 Disposals (1,225,571) (11,158) (47,432) (1,261) (4,462) (1,289,884)At 31 December 2014 14,208,967 338,704 1,095,146 1,624,817 54,359 17,321,993

Accumulated depreciationAt 1 January 2013 539,474 154,199 558,194 1,360,231 31,664 2,643,762 Charge for the year 340,516 36,805 151,670 278,707 6,460 814,158 Disposals - (48,043) (52,052) (20,041) (4,820) (124,956) At December 2013 879,990 142,961 657,812 1,618,897 33,304 3,332,964

At 1 January 2014 878,990 142,961 657,812 1,618,897 33,304 3,332,964 Charge for the year 197,891 82,214 211,694 101,978 4,949 598,726 Disposals - (7,743) (12,154) (1,260) (4,459) (25,616)At 31 December 2014 1,077,881 217,432 857,352 1,719,615 33,794 3,906,074

Net book valuesAt 31 December 2014 12,633,691 127,153 222,175 412,335 20,565 13,415,919

At 31 December 2013 14,455,228 175,516 310,623 1,414 20,652 14,963,433


CompanyCost Motor

VehiclesPlant and

MachineryFurniture &

FittingsComputer

EquipmentTotal

N’000 N’000 N’000 N’000 N’000

At 1 January 2013 215,830 186,271 66,059 53,897 522,057 Additions 51,177 40,185 7,271 5,168 103,801 Disposals (32,082) (84,097) (24,639) (5,108) (145,926) At 31 December 2013 234,925 142,359 48,691 53,957 479,932

At 1 January 2014 234,925 142,359 48,691 53,957 479,932 Additions 31,385 18,641 3,541 4,865 58,432 Disposals (11,158) (47,432) (1,261) (4,462) (64,313)At 31 December 2014 255,152 113,568 50,971 54,359 474,051

Accumulated depreciationAt 1 January 2013 110,032 128,876 38,474 31,664 309,046 Charge for the year 27,405 10,781 6,382 6,460 51,028 Disposals (27,710) (52,052) (20,041) (4,820) (104,623) At 31 December 2013 109,727 87,605 24,815 33,304 255,451

At 1 January 2014 109,729 87,605 24,815 33,304 255,453 Charge for the year 70,970 17,197 24,216 4,949 117,332 Disposals (7,743) (12,154) (1,260) (4,459) (25,616) At 31 December 2014 172,956 92,648 47,771 33,794 347,169

Net book valuesAt 31 December 2014 82,196 20,920 3,200 20,565 126,881

At 31 December 2013 125,198 54,754 23,876 20,653 224,481


13. Intangible assets

Group Company

Software

Cost N’000 N’000

At 1 January 2013 213,448 213,448 31 December 2013 213,448 213,448

At 1 January 2014 213,448 213,448 Additions 61,307 22,291 At 31 December 2014 274,755 235,739

Accumulated amortisationAt 1 January 2013 203,636 203,636 Amortisation for the year 9,812 9,812 31 December 2013 213,448 213,448

At 1 January 2014 213,448 213,448 Amortisation for the year 30,954 1,486 At 31 December 2014 244,402 214,934

Net book valuesAt 31 December 2014 30,353 20,806

At 31 December 2013 - -


14. Investment properties

Group Company

Freehold buildings

Leasehold buildings

Total investment properties

Freehold buildings

Leasehold buildings


Fair value N’000 N’000 N’000 N’000 N’000 N’000

At 1 January 2013 655,852 31,564,812 32,220,664 655,852 31,564,812 32,220,664 Additions - 1,969,997 1,969,997 - 1,969,997 1,969,997 Disposals - (19,727,666) (19,727,666) - (19,727,666) (19,727,666)Net gain from fair valuation adjustments on investment properties - 865,900 865,900 - 865,900 865,900 At 31 December 2013 655,852 14,673,043 15,328,895 655,852 14,673,043 15,328,895

At 1 January 2014 655,852 14,673,043 15,328,895 655,852 14,673,043 15,328,895 Additions 18,132 59,235 77,367 18,132 59,235 77,367 Reclassification from property stocks held as inventories (note 18) - 297,741 297,741 - 297,741 297,741 Disposals - (703,300) (703,300) - (703,300) (703,300)Net gain from fair valuation adjustments on investment properties - 1,541,406 1,541,406 - 1,541,406 1,541,406 At 31 December 2014 673,984 15,868,125 16,542,109 673,984 15,868,125 16,542,109

Schedule of net gain on disposal The Group The Company

2014 2013 2014 2013

Sales proceed 1,200,000 22,492,657 1,200,000 22,492,657 Cost of investment properties (703,300) (19,727,666) (703,300) (19,727,666)

496,700 2,764,991 496,700 2,764,991


Group Company

At 31 December 2013 Freehold building

Leasehold building


Freehold building

Leasehold building


N’000 N’000 N’000 N’000 N’000 N’000

Level 1 - - - - - - Level 2 655,852 14,673,041 15,328,893 655,852 14,673,041 15,328,893 Level 3 - - - - - -

655,852 14,673,041 15,328,893 655,852 14,673,041 15,328,893

The Group The Company

At 31 December 2014 Freehold building

Leasehold building


Freehold building

Leasehold building


N’000 N’000 N’000 N’000 N’000 N’000

Level 1 - - - - - - Level 2 673,984 15,868,125 16,542,109 673,984 15,868,125 16,542,109 Level 3 - - - - - -

673,984 15,868,125 16,542,109 673,984 15,868,125 16,542,109

The table above analyses investment properties carried at fair value, by valuation method. The different levels have been defined as follows:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (that is, unobservable inputs).


14. Investment properties (continued)The Group’s investment properties were revalued at 31 December 2014 by independent professionally qualified valuers ( Messrs Steve Akhigbemidu & Co.) who hold recognised relevant professional qualifications and have recent experience in the locations and categories of the investment properties valued.

Rental income from investment properties recognised in the year was N558.3 miilion (2013: N1.1 billion) while property operating expenses that contributed to this income was N105.6 million (2013: N275.9 million).

Property operating expenses relating to investment properties that did not generate rental income is N28.4 million (2013: N11.0 million)

15. Investments in associates and joint venturesThe amounts recognised in the balance sheet are as follows:

Group Company

2014 2013 2014 2013

N’000 N’000 N’000 N’000

Associate 18,538,372 16,617,305 16,489,153 16,617,305 Joint ventures 478,597 1,290,329 478,597 1,290,329 Other investments 83,606 83,606 83,606 83,606

19,100,575 17,991,240 17,051,356 17,991,240

15.1 InvestmentsSet out below is the associate of the group as at 31 December 2014. The associate as listed below has share capital consisting solely of ordinary shares, which are directly held by the group. The country of incorporation or registration is also the principal place of business.

Nature of investment in associate:

Name of entity Country of incorporation

2014 2013 2014 2013 Measurement method

N’000 N’000 % ownership % ownership

UPDC REIT Nigeria 18,538,372 16,617,305 61.5% 62.2% Equity

The UPDC Real Estate Investment Trust (REIT) is a close-ended real estate investment instrument which is listed on the Nigerian Stock Exchange. As at 31st December 2014, the fair value of UPDC REIT was N10.00 per unit.


The movement in the investment in associate, joint ventures and other investments during the year is stated below:

Group Company

2014 2013 2014 2013

N’000 N’000 N’000 N’000

At 1 January 17,991,241 327,776 17,991,241 327,776 Share of profit 2,978,959 - - - Addition to investment 17,663,465 - 17,663,465 Disposal of associate (939,885) - (939,885) - Dividend received (929,740) - - - At 31 December 19,100,575 17,991,241 17,051,356 17,991,241

Share of profit of associates:UPDC diversified its portfolio in 2013 through the floating of the UPDC Real Estate Investment Trust (REIT) at a capital value of N26.7 billion listed on the Nigerian Stock Exchange (NSE) on 1 July, 2013.

The REIT is a property fund backed by Five (5) major investment properties located in Lagos, Abuja and Aba.

The REIT’s income comprises of rental income from the proerty assets and interest earned from short term investments in money market instruments and other real estate related instruments.

UPDC held 61.5% of the REIT fund at 31 December 2014. The share of profit recognised in the group financial statements relates to UPDC’s percentage share of the REIT’s profit for the 18-month period from July 2013 to December 2014. The reported share of profit from UPDC REIT (N2.9 billion) comprises of actual operating profit (N1.6 billion) and gain on revaluation of investment properties held(N1.4 billion). N929.7 million cash distribution was received during the year (for 13 months to June 2014).

The SEC has approved the REIT’s financial statements to December 2014 and the outstanding cash distribution will be recognised when received in April 2015.

The revaluation gain is not distributable until the affected investment properties are disposed.


Nature of investments in Joint Ventures:

Name of SPV / JV Project Country of incorporation

Nature of relationship

Measurement method

% Interest held

First Festival Mall limited Festival Mall Nigeria Joint venture Equity 45%First Restoration Dev. Coy Limited

Olive court Nigeria Joint venture Equity 51%

Pinnacle Apartments Dev. Limited

Pinnacle Estate

Nigeria Joint venture Equity 51%

Calabar Golf Estate Limited Golf estate Nigeria Joint venture Equity 51%UPDC Metrocity Ltd Metrocity Nigeria Joint venture Equity 60%Transit Village Dev. Co. Ltd. Transit Village Nigeria Joint venture Equity 40%

* All joint ventures are primarily set up for projects as stated above

Set out below are the summarised financial information for the associates and joint ventures accounted for using the equity method.

Name of SPV / JV Non Current Assets

Current Assets Non-Current Liabilities

Current Liabilities

Revenue Profit/(Loss)

31 December 2014First Festival Mall Ltd 3,854,035 1,149,253 - 1,530,289 - - First Restoration Dev. Coy Limited 305,325 544,646 305,325 544,646 - - Pinnacle Apartments Dev. Limited 1,724,136 445,916 650,000 1,520,252 - - Calabar Golf Estate Limited 775,000 1,236,115 461,115 - - - UPDC Metrocity Ltd 1,208,150 7,836,647 3,150,420 3,181,384 - - Transit Village Dev. Co. Ltd.

136,010 - - - - -

UPDC REIT 23,708,000 7,219,087 146,750 748,038 2,048,292 4,843,835

1 January 2014

First Festival Mall Ltd - - - - - - UPDC Metrocity Ltd 7,649,658 - - 2,926,910 - - Transit Village Dev. Co. Ltd.

136,010 - - -

UPDC REIT 21,861,110 7,391,990 27,590,098 1,663,002 1,215,006 907,403


16. Investments in subsidiaries

Principal investments 2014 2013 2014 2013

N’000 N’000 % ownership % ownership

UPDC Hotels Limited(2,082,500,000 Shares of =N=1.00 each) 2,082,500 2,082,500 94.70 94.70 Manor Gardens Property Development Co. Ltd.(53,810,000 ordinary shares of =N=1.00 each) 53,810 53,810 67.50 67.50

2,136,310 2,136,310

17. Inventories

Group Company

2014 2013 2014 2013

N’000 N’000 N’000 N’000

Consumption stocks and spares 142,520 159,881 - - Non trade stock 37,254 164,789 15,401 16,619 Properties under construction (Note 18) 9,489,183 12,707,099 9,742,222 12,707,099

9,668,958 13,031,769 9,757,623 12,723,718 All inventory above are carried at cost at all the periods reported.

18. Properties under construction

Cost/Valuation Group Company

N’000 N’000

Balance 1 January 2014 12,707,099 12,707,099 Additions 5,125,222 5,125,222 Reclassification as investment properties (Note 14) (297,741) (297,741) Disposals (7,498,376) (7,498,376) Impairment of parkview estate (293,982) (293,982) Unrealised gain on transfer of asset (253,039) - Balance at 31 December 2014 9,489,183 9,742,222


19. Trade and other receivables

Group Company

Receivables due within one year 2014 2013 2014 2013

N’000 N’000 N’000 N’000

Trade receivables 2,403,087 1,698,201 2,293,106 1,171,645 Less: provision for impairment of trade receivables (195,644) (173,580) (195,644) (173,580) Net trade receivables 2,207,443 1,524,621 2,097,462 998,065 Receivables from related companies (Note 27) 5,379,612 3,039,366 20,180,329 19,337,465 Other receivables 316,928 545,077 268,791 545,077 Advances to staff 10,818 3,663 10,745 7,113 Mobilization payment to contractors 1,178,714 - 1,178,714 - Prepayments and accrued income 109,614 57,980 65,121 57,980

9,203,129 5,170,707 23,801,162 20,945,700 Analysis of other receivablesBond sinking fund 166,667 333,333 166,667 333,333 Sundry debit balances 150,261 211,744 102,124 211,744

316,928 545,077 268,791 545,077

Movements in the provision for impairment of trade receivables are as follows:

Group Company

2014 2013 2014 2013

N’000 N’000 N’000 N’000

At 1 January 173,580 187,441 173,580 187,441 Provision for receivables impairment 22,064 128,911 22,064 128,911 Unused amounts reversed - (142,772) - (142,772) At 31 December 195,644 173,580 195,644 173,580


20. Cash and cash equivalents

Group Company

2014 2013 2014 2013

N'000 N'000 N'000 N'000

Cash at bank and in hand 126,578 63,012 58,858 18,081 Less: bank overdrafts (included in borrowings, Note 21) (1,136,708) (1,209,831) (1,136,708) (1,209,831) Cash and cash equivalents (1,010,130) (1,146,819) (1,077,850) (1,191,750)

21. Borrowings

Group Company

2014 2013 2014 2013

N'000 N'000 N'000 N'000

Current borrowingsOverdrafts due within one year 1,136,708 1,209,831 1,136,708 1,209,831 Commercial papers (ii) 10,432,861 11,232,861 10,432,861 11,232,861 Loans due within one year (i) 4,455,931 6,570,000 4,455,931 6,570,000

16,025,500 19,012,692 16,025,500 19,012,692 Non-current borrowingsLoans due after one year (i) 7,501,530 4,441,331 7,501,530 4,441,331 Total borrowings carried at fair value 23,527,030 23,454,023 23,527,030 23,454,023


(i) Loans

Company Amount due

2014 2013

Details of the loan maturities are as follows:

N'000 N'000 Tenor Repayment terms

Security

First Bank of Nigeria Limited

1,001,463 2,000,000 12 months Quarterly Equitable mortgage

FBN Plc (Refinanced IFC Loan )

- 570,000 3 months Half yearly Equitable mortgage

Union Bank of Nigeria Plc 53,000 - 12 months Quarterly Equitable mortgageFSDH Merchant Bank Ltd 4,000,000 - 53 months Quarterly Equitable mortgageGuaranty Trust Bank Plc 3,500,000 - 56 months Quarterly Equitable mortgageCorporate Bond (Series 1) 3,401,468 8,441,330 8 months 36 months Bank guarantee,

equitable mortgage, sinking fund

11,955,931 11,011,330

The average interest rate for facilities from local banks during the period was 14.2% (2013: 13.1%) inclusive of the balance of the Corporate Bond at 10% coupon.

All covenants attached to borrowings have been complied with throughout the year.

Total borrowing cost of N1.5 billion (2013: N1.7 billion) were capitalised into various projects using weighted average rate of 14.8%.

ii) Commercial papers

Group Company

2014 2013 2014 2013

N'000 N'000 N'000 N'000

First Bank of Nigeria Limited - 300,000 - 300,000 UBA Plc 7,932,861 6,432,861 7,932,861 6,432,861 FSDH Merchant Bank Limited 500,000 4,500,000 500,000 4,500,000 Zenith Bank Plc 2,000,000 - 2,000,000 - Total Commercial Papers 10,432,861 11,232,861 10,432,861 11,232,861


22. Trade and other payables

Group Company

2014 2013 2014 2013

N'000 N'000 N'000 N'000

Trade payables 1,243,537 3,485,243 1,143,359 3,411,318 Amounts owed to group companiesAmounts owed to other related parties (Note 27) 2,490,404 1,260,776 2,490,404 1,260,776

3,733,941 4,746,019 3,633,763 4,672,094 Other payables 1,001,386 1,512,773 1,212,242 1,512,773 Rental income received in advance (Note 26) 114,264 134,000 114,264 134,000 Accruals 1,760,861 890,088 1,548,782 916,147 Total 6,610,452 7,282,881 6,509,051 7,235,014

Group Company

2014 2013 2014 2013

Days Days Days Days

Average credit period taken for trade purchases 87 72 87 72

Trade and other payables comprise amounts outstanding for trade purchases and ongoing costs. The Directors consider the carrying amounts of trade and other payables to approximate their fair value.


23. Deferred TaxThe analysis of deferred tax assets and deferred tax liabilities is as follows:

Group Company

2014 2013 2014 2013

Deferred tax liabilities: N'000 N'000 N'000 N'000

– Deferred tax liability to be recovered after more than 12 months 1,732,957 1,732,957 1,040,022 1,732,957 – Deferred tax liability to be recovered within 12 months 692,935 - - - Deferred tax (liabilities) / assets 1,040,022 1,732,957 1,040,022 1,732,957

The gross movement on the deferred income tax account is as follows:

Group Company

2014 2013 2014 2013

N'000 N'000 N'000 N'000

At 1 January 1,732,957 1,726,333 1,732,957 1,726,333 Income statement charge (692,935) 6,624 (692,935) 6,624 At 31 December 1,040,022 1,732,957 1,040,022 1,732,957

The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

The Group

Deferred tax liabilities Property, plant and

equipment

Investment property

Provisions Total

N'000 N'000 N'000 N'000

At 1 January 2014 (1,680) 1,731,057 3,580 1,732,957 Charged/(credited) to the income statement (9,015) - (683,920) (692,935)At 31 December 2014 (10,695) 1,731,057 (680,340) 1,040,022


The Company

Deferred tax liabilities Property, plant and

equipment

Investment property

Provisions Total

N'000 N'000 N'000 N'000

At 1 January 2014 (1,680) 1,731,057 3,580 1,732,957 Charged/(credited) to the income statement (9,015) - (683,920) (692,935)At 31 December 2014 (10,695) 1,731,057 (680,340) 1,040,022

Group/CompanyAt the balance sheet date, the Group has nil unused tax losses (2013:Nil ) available for offset against future profits.

24. Share capital

Group and Company2014 2013

Number Amount Number Amount

N'000 N'000 000 N'000

Authorised:Ordinary shares of 50k each 2,000,000 1,000,000 2,000,000 1,000,000 Issued and fully paid:Ordinary shares of 50k each 1,718,750 859,375 1,375,000 687,500

Movements during the year: Group and Company

Number of shares

Value of shares

N'000 N'000

Balance at 1 January 2014 1,375,000 687,500 Bonus issue 343,750 171,875 At 31 December 2014 1,718,750 859,375

The Company held an Annual General Meeting on 4th June 2014, where the shareholders approved a bonus issue of 1 for every 4 shares to existing shareholders as at 12 May, 2014. 343,750,000 ordinary shares of 50 kobo each were issued to existing shareholders. The ordinary shares issued from the share premium account have the same rights as the other shares in issue.


25. Reconciliation of profit before tax to cash generated from operations

Group Company

2014 2013 2014 2013

N'000 N'000 N'000 N'000

Profit before tax 3,540,525 3,707,533 2,036,161 4,379,074 Adjustment for non cash itemsDepreciation 598,726 814,157 117,332 51,028 Amortization of intangible asset 30,954 9,812 1,486 9,812 Fair value gain on investment properties (1,541,406) (865,900) (1,541,406) (865,900) Gain on disposal of investment properties (496,700) (2,764,991) (496,700) (2,764,991) Fair value (gain)/loss on loans and borrowings (36,870) 107,997 (36,870) 107,997 Transfer of investment property from construction WIP (297,741) - (297,741) - Loss on disposal of property, plant and equipment 37,309 41,985 37,309 41,985 Finance cost 2,657,289 2,014,157 2,657,289 2,014,157 Finance income (721,787) (637,798) (721,787) (637,798) Income distribution from REIT (929,740) - (929,740) - Share of associate's profit (2,049,219) - - -

791,340 2,426,952 825,333 2,335,362Changes in working capitalDecrease in inventories 4,588,383 3,624,717 2,966,095 3,660,108 (Increase)/ decrease in receivables (4,032,422) 1,343,678 (2,855,462) 1,327,396 Decrease in payables (811,954) (3,430,390) (719,473) (3,517,864) Cash generated from operations 535,347 3,964,957 216,493 3,805,004


26. Deferred incomeDeferred income are rentals received in advance which are recognized in the income statement when earned.

Group Company

2014 2013 2014 2013

N'000 N'000 N'000 N'000

Within one year 114,264 134,000 114,264 134,000 Greater than one year 144,422 283,552 144,422 137,931

258,686 417,552 258,686 271,931

The Group and Company leased out a number of premises. These are subject to review dates ranging from 1 to 2 years.

27 Related party transactionsThe ultimate parent and controlling party of the company is UAC of Nigeria Plc incorporated in Nigeria. There are other companies that are related to UPDC through common shareholdings. The following transactions were carried out with related parties:

(a) Sales of goods and services.

Relationship Group Company

2014 2013 2014 2013

N'000 N'000 N'000 N'000

UAC of Nigeria Plc Parent 122,149 115,559 122,149 115,559 GM Nigeria Limited Fellow Subsidiary - 1,300 - 1,300 UAC Restaurants Limited Fellow Subsidiary 2,505 5,043 2,505 5,043 MDS Logistics Limited Fellow Subsidiary 9,453 15,482 9,453 15,482 Unico CPFA Fellow Subsidiary 37,658 5,951 37,658 5,951 Warm Spring Waters Nig Limited Fellow Subsidiary - 107 - 107 UPDC Hotels Limited Subsidiary - - - - Key management personnel Directors 195,000 - 195,000 -


( b) Purchases of goods and services Group Company

2014 2013 2014 2013

N'000 N'000 N'000 N'000

UAC of Nigeria Plc Parent 85,863 65,987 85,863 65,987 UNICO CPFA Limited Fellow Subsidiary 103 11,821 103 11,821 UAC Restaurants Limited Fellow Subsidiary 33,212 5,155 33,212 5,155 CAP Plc Fellow Subsidiary 32,722 43,345 32,722 43,345 Grand Cereals Limited Fellow Subsidiary 1,011 - 1,011 14,221 Warm Spring Waters Nig Limited Fellow Subsidiary 529 529 MDS Logistics Limited Fellow Subsidiary 52,291 970 52,291 970 UPDC Hotels Limited Subsidiary - - 14,006 14,221

(c) Key management compensationKey management have been determined as directors (executive and non-executive) the Chairman and other senior management that form part of the leadership team. Details of compensation are documented in note 6.(d) Year-end balances arising from sales/purchases of goods/services.

Group Company

2014 2013 2014 2013

Receivables: N'000 N'000 N'000 N'000

UPDC Metrocity Limited loan (i) 1,383,626 1,383,626 1,383,626 1,383,626 UPDC Metrocity Limited 967,422 617,865 967,422 617,865UPDC Hotels Limited (ii) subsidiary - - 14,483,935 16,091,311 First Festival Mall Limited loan (iii) Joint Venture 1,328,422 - 1,328,422 - First Festival Mall Limited - Short term working capital advances (iii) Joint Venture 671,991 438,885 671,991 438,885 First Festival Mall Limited - 1,772 - 1,772Calabar Golf Estate Limited 465,831 2,001 465,831 2,001 First Restoration Limited - 30,935 - 30,935Pinnacle Apartment Development Limited 58,134 129,419 58,134 129,419Manor Gardens Property Development Company Limited - - 316,782 206,788 MDS logistics Limited 2,510 2,510 2,510 2,510 Imani and Sons Nigeria Limited (Pinnacle JV) 501,676 432,353 501,676 432,353

5,379,612 3,039,366 20,180,329 19,337,465i. Loan to UPDC Metro City Ltd attracts 17% interest per annum and repayable on conclusion of the project.ii. Advances to Updc Hotels Limited is interest free and repayable on demand.iii. Loan to First Festival Mall Limited attracts interest at MPR + 4% per annum and repayable after 2 years of operation. iv. The advance to Imani and Sons was to discharge legal mortgage from the JV land. It attracts interest charge at 18.5% per annum UPDC ANNUAL REPORT 105

and is recoverable from the JV partner’s share of profit.

Group Company

2014 2013 2014 2013

Payables: N'000 N'000 N'000 N'000

UAC of Nigeria Plc. 1,559,868 60,711 1,559,868 60,711First Restoration Dev. Co. Ltd 27,828 - 27,828 - UPDC REIT 2,708 - 2,708 - MDS Logistics Limited 900,000 1,200,065 900,000 1,200,065

2,490,404 1,260,776 2,490,404 1,260,776

All trading balances will be settled in cash.

There were no provisions for doubtful related party receivables at 31st December 2014 (2013: nil) and no charges to the income statement in respect of doubtful related party receivables (2013: nil).

The related party transactions were carried out on commercial terms and conditions.

28. Capital commitments and contingent liabilitiesCapital Commitments

Group Company

2014 2013 2014 2013

N'000 N'000 N'000 N'000

Capital expenditure authorised 10,847,425 13,682,848 10,847,425 13,682,848 Capital commitment 5,329,357 4,647,410 5,329,357 4,647,410

Contingent liabilities

In 2006, UPDC acquired a parcel of land in Ikoyi from Wema Bank. The property was originally owned by the Federal Ministry of Works and Housing (FMWH). Subsequently, Parkview Estate was developed on the property at a carrying value of N1.5billion.

However, County & City Bricks Limited (CCBL) had taken the Federal Government and UPDC to court claiming that the land was leased to it in 1998 and therefore any subsequent dealing on the portion of land adverse to its interest is null and of no effect.

Judgment was delivered in June 2009 to the effect that there was indeed a contract between the FMWH and CCBL which the Ministry breached and that CCBL is entitled to statutory right of occupancy over the parcel of land measuring 16 hectres in Parkview, Ikoyi (including the UPDC acquired area). The court further declared that the certificates of UPDC and other parties to the suits were null and void. CCBL, with the help of police officers, but without a writ of execution from the Court and any bailiff of Court, forcefully took over the premises and ejected UPDC’s contractors and


workers therefrom.

UPDC has appealed the judgment. The lawyer’s opine that UPDC has a high chance of succeeding in its appeal because of inconsistencies in the judgment of the High Court and that the company is a bonafide purchaser for value without notice of any encumbrance on the property before acquiring a legal title.

Steve Akhigbemidu & Co. (Estate Surveyors & Valuers) assessed and valued the property - fair market value: N1.8 billion, forced sale value: N1.2 billion.

The directors have written down the property to its forced sale value of N1.2 billion.

In an event the company loses the case, the carrying value of the property in its books is N1.2 billion.

There were other litigations as at the balance sheet date in the ordinary course of business which involved land acquisition, contractual claims and recovery of overdue rents and service charges. In the opinion of the Directors, no material loss is expected to arise from these. However, those evaluated to likely result in loss were provided for.

During the year, the company disposed some of its investment properties which resulted in a taxable profit of N805 million. The company intends to re-invest the outstanding profit of N805 million in investment property before 30 June 2015, hence this amount has not been subject to Capital Gains Tax (CGT). In the event that the company is unable to reinvest this amount before the said date, the company will have a CGT liability of N80 million.

29. Management service agreementThe company has a Management Service Agreement with UAC of Nigeria Plc. This agreement provides that the Company pays an annual fee of 1% of its turnover to UACN for services received under the agreement. The services provided include Business Strategy and Financial Advisory, Treasury, Secretarial & Legal, Human Resources Management, Insurance, Pensions & Gratuity Administration, Medical etc. The amount charged in these financial statements is N100.81 million (2013-N93.28 million)


Group Company

2014 2013 2014 2013

N'Million % N'Million % N'Million % N'Million %

Sale of properties, rents and services 11,701 11,299 10,081 9,328 Bought in materials and services (All local) (3,376) (3,977) (4,087) (2,270) Value Added 8,325 100 7,322 100 5,994 100 7,058 100 Distribution: Employees 834 10 687 9 489 8 604 9 Taxes 644 8 552 8 644 11 552 8 Interest charges 2,657 32 2,014 28 2,657 44 2,014 29 Dividend - - 963 13 - - 963 14 Depreciation 600 7 824 11 119 2 61 1 Transfer to non-controlling interests (13) (0) (38) (1) - - - - Retained Profit 3,602 43 2,320 32 2,085 35 2,864 41

8,325 100 7,322 100 5,994 100 7,058 100

Value added statementfor the year ended 31 December 2014

10% 8%

32%

0%

7%

0%

43% Employees

Taxes

Interest charges

Dividend

Depreciation

Transfer to non-controlling interests

Retained Profit


Five-year financial summary

2014 2013 2012 2011 2010N'000 N'000 N'000 N'000 N'000

Statement of financial position as at 31 DecemberNigeria GAAP

LiabilitiesNon-current liabilities 8,685,975 6,457,840 14,052,171 18,127,560 21,974,749 Current liabilities 23,348,880 26,664,943 26,059,945 20,926,959 16,781,046 Total liabilities 32,034,854 33,122,783 40,112,116 39,054,519 38,592,486 Ordinary share capital 859,375 687,500 687,500 687,500 687,500 Share premium 3,943,273 4,115,148 4,115,148 4,115,148 4,115,148 Revenue reserve 31,330,132 28,691,018 26,459,730 25,136,674 24,161,834 Shareholders' funds 36,132,780 33,493,666 31,262,378 29,939,322 28,964,482 Non-controlling interest (80,013) (67,393) (15,875) 22,548 61,202 Total equity 36,052,766 33,426,273 31,246,503 29,961,870 29,025,684 Net equity and liabilities 68,087,620 66,549,056 71,358,619 69,016,388 67,618,170 PPE & Investment properties 29,988,381 30,292,328 47,787,488 43,535,227 37,884,938 Long term Investments 19,100,575 17,991,241 327,776 81,606 981,644 Current assets 18,998,665 18,265,488 23,243,356 25,399,556 28,751,588 Total assets 68,087,621 66,549,056 71,358,619 69,016,388 67,618,170

Comprehensive income Nigeria GAAPRevenue 11,700,506 11,298,899 12,039,603 6,782,819 8,194,305 Profit before taxation 3,540,525 3,707,533 2,454,951 2,398,713 2,538,771 Taxation 48,552 (552,114) (274,640) (728,608) (260,745)Profit after taxation 3,589,077 3,155,419 2,180,310 1,670,105 2,278,026 Non-controlling Interest (12,620) (38,369) (35,190) (38,791) 45,054 Earnings per share for profit attributable to the equity holders of the group 3,601,697 3,193,788 2,215,500 1,708,895 2,323,080 Proposed dividend (859,375) (962,500) (962,500) (893,750) (756,250)Retained profit 2,742,322 2,231,288 1,253,000 815,145 1,566,830

Basic Earnings per share (kobo) 210 232 161 124 169Dividend per share (kobo) 50 70 70 65 55Net assets per share (Naira) 21.0 24.3 22.7 21.8 21.7

Note : The earnings, dividends and net assets per share of 50 kobo are computed respectively on the profit after taxation, proposed dividends and the shareholders' funds each on the basis of the number of shares in issue as at 31st December.


Shareholders’ information

Analysis of shareholdingAccording to the register of members, two shareholders (UAC of Nigeria Plc and FBN Trustees Limited) each held more than 5% of the issued capital of the company as at 31st December 2014. The shareholders held 46% and 8.65% respectively. No other person / body other than stated held more than 5% and above of the company’s paid-up share capital.

Shareholding range analysisRange Holders Holders % Holders cum Units Units % Units cum

1-5,000 21,155 75.82 21155 36,769,717 2.14 367697175,001 -10,000 3,160 11.33 24,315 22,020,054 1.28 58,789,77110,001 -50,000 2,704 9.69 27,019 57,594,668 3.35 116,384,43950,001 -100,000 455 1.63 27,474 32,557,228 1.89 148,941,667100,001 -500,000 320 1.15 27,794 65,419,228 3.81 214,360,895500,001 -1,000,000 53 0.19 27,847 37,506,588 2.18 251,867,4831,000,001 -10,000,000 38 0.14 27,885 116,746,506 6.79 368,613,98910,000,001 -100,000,000 14 0.05 27,899 410,908,754 23.91 779,522,743100,000,001 _ 500,000,000 1 0.00 27,900 148,602,252 8.65 928,124,995500,000,001 _ 1,000,000,000 1 0.00 27,901 790,625,000 46.00 1,718,749,995

27,901 100.00 1,718,749,995 100.00

Share capital historyYear Bonus issue Units Value (N)

1999 Starting capital 1,000,000,000 500,000,0002004 1 for 10 bonus issue 1,100,000,000 550,000,0002005 to 2009 None 1,100,000,000 550,000,0002010 1 for 4 bonus issue 1,375,000,000 687,500,0002011 to 2012 None 1,375,000,000 687,500,0002013 1 for 4 bonus issue 1,718,750,000 859,375,0002014 None 1,718,750,000 859,375,000


Five-year share price historyYear Last trading day Closing share price Inc / (Dec) over

preceding year

2010 December 31, 2010 16.51 (17%)2011 December 31, 2011 12.00 (27%)2012 December 31, 2012 11.00 (8%)2013 December 31, 2013 19.00 73%2014 December 31, 2014 9.50 (50%)

Five-year dividend historyDividend number Reporting period Closure date Dividend per share Dividend total (N)

12 2009 Accounting year 21st May 2010 50k 550,000,00013 2010 Accounting year 7th June 2011 55k 756,250,00014 2011 Accounting year 16th May 2012 65k 893,750,00015 2012 Accounting year 20th May 2013 70k 962,500,00016 2013 Accounting year 12th May 2014 70k 962,500,000

Unclaimed dividends list as at 31st December 2014S/N Date of payment Dividend number Amount of dividend

declaredTotal dividend paid

to dateUnpaid dividend

(Unclaimed dividend)

1 2 Taken over2 7/11/2001 3 269,999,999.74 265,032,170.51 4,967,829.233 5/31/2002 4 315,000,000.00 306,967,443.53 8,032,556.474 5/31/2003 5 315,000,000.00 293,626,780.54 21,373,219.465 5/31/2004 6 405,000,000.00 393,759,796.58 11,240,203.426 5/23/2005 7 180,000,000.00 179,838,013.47 161,986.537 5/29/2006 8 247,500,000.00 238,327,766.37 9,172,233.638 5/29/2007 9 346,499,999.00 337,118,397.38 9,381,601.629 5/13/2008 10 485,099,998.67 478,068,566.51 7,031,432.1610 5/12/2009 11 742,499,997.97 715,926,313.03 26,573,684.9411 6/15/2010 12 494,999,998.65 484,166,346.24 10,833,652.4112 6/7/2011 13 680,624,998.02 667,956,829.37 12,668,168.6513 5/16/2012 14 804,375,000.00 797,625,136.92 6,749,863.0814 6/21/2013 15 866,249,997.48 849,503,804.87 16,746,192.6115 6/5/2014 16 866,250,000.00 696,207,045.14 170,042,954.86


CSR: FOOTBALL MATCH WITH LASTMA OFFICIALS


Africa Prudential Registrars

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CLIENTELE

C005


11,�Lafia�Close,Area�8,�Garki; Abuja.Tel:�09-8701645

AbujaPlot�137,�Olu-Obasanjo�Road(2nd�floor),�Port-HarcourtRivers�State.

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The�provision�of�information�on�your�Bank�Name,�Bank Account�No.,�E-mail�address�and�Mobile�number�are�very�important�to�enable�us

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Shareholders�in�the�North�and�South-south�region�of�the�country�are�advised�to�contact�our or Liaison�Office

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PROXY FORM

UACN PROPERTY DEVELOPMENT COMPANY PLC 17th Annual General Meeting to be held at 10am on Tuesday 1st September, 2015 at Arthur Mbanefo Hall, Golden Tulip Festac, Amuwo-Odofin, Lagos

being a member/members of UACN PROPERTY DEVELOPMENT COMPANY PLC

do hereby appoint

___________________________________________________

or failing him the Chairman of the Meeting as my/our proxy to vote for me/us on our behalf at the General Meeting of the Company to be held on Tuesday 1st September, 2015 and at every adjournment thereof

Dated this ________ day of _____________________ 2015.

Shareholder’s signature _____________________________

NOTES1. A member (shareholder) who is unable to attend an Annual General Meeting is allowed by law to attend by proxy.

The above form has been prepared to enable you to exercise your vote if you cannot personally attend.

2. Provision has been made on this form for the Chairman of the Meeting to act as your proxy, but if you wish you may insert in the blank space on the form (marked*) the name of any person, whether a member of the Company or not, who will attend the Meeting and vote on your behalf instead of the Chairman of the Meeting.

3. Please sign the above proxy form and post it so as to reach the address shown over leaf not later than 5.00 p.m. on Friday 28th August, 2015. If executed by a corporation, the proxy form should be sealed with the Common Seal and signed.

4. The proxy must produce the Admission form sent with the Report and Accounts to obtain entrance to the Meeting.

5. The proxy form should not be completed and sent to the address if the member will be attending the meeting in person.

RESOLUTIONS FOR AGAINST ABSTAIN

ORDINARY BUSINESS

To declare DividendTo re-elect Mr. Abdul A Bello as a Director To re-elect Mr. Adekunle O Awojobi as a Director To appoint Ernst & Young as External AuditorTo authorize the directors to fix Auditor’s remuneration

To elect members of the Audit CommitteeSPECIAL BUSINESS

To fix the remuneration of DirectorsTo approve increase in authorized share capitalTo approve capital raising programme


IF YOU ARE UNABLE TO ATTEND, PLEASE(a) Write the name of your proxy (if any) where marked.*

(b) Ensure that the form is signed by you and stamped with COMMISSIONER OF STAMP DUTIES.

(c) Tear the proxy form along the perforated lines and post so as to reach the address shown overleaf not later than 24 hours before the time of holding the meeting.

--------------------------------------------------------------------------------------------------------------------------------------

ADMISSION FORM

UACN PROPERTY DEVELOPMENT COMPANY PLC

Annual General Meeting Admission Card

Please admit

to the 17th Annual General Meeting of UACN PROPERTY DEVELOPMENT COMPANY PLC

which will be held at Arthur Mbanefo Hall, Golden Tulip Festac, Amuwo-Odofin, Lagos on Tuesday, 1st September, 2015 at 10am

IMPORTANT NOTICE:1. This admission card must be produced by the Shareholder or his proxy in order to obtain entrance to the Annual

General Meeting.

2. Shareholders or their proxies are requested to sign the admission card in the appropriate place before attending the Meeting

GODWIN A SAMUEL, ESQCOMPANY SECRETARY

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UACN PROPERTY DEVELOPMENT COMPANY PLC

17th Annual General Meeting Admission Card

Name and Address of Shareholder Signature of person attending

SHAREHOLDER ____________________________________

PROXY ______________________________________________


Cameron Green, Ikoyi - UPDC · 2018. 9. 14. · by the provisions of section 359 of the Companies &...

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Transcript of Cameron Green, Ikoyi - UPDC · 2018. 9. 14. · by the provisions of section 359 of the Companies &...